Dive Brief:
- End-user spend on public cloud will reach $678.8 billion next year, increasing 20.4% year over year, Gartner reported Monday. Spending is expected to hit $566.6 billion this year.
- Hunger for generative AI capabilities will be a prime driver of market growth, as organizations race to adopt the infrastructure-hungry technology, according to Gartner. Hyperscaler verticals that integrate industry-specific software, platform and infrastructure services will be another growth vector, the report said.
- “Cloud has become essentially indispensable,” Sid Nag, VP analyst at Gartner, said in the report, pointing to the sheer scale of data and compute needed to power generative AI adoption.
Dive Insight:
Cloud’s perennial strength rests in its adaptability.
When economic forecasts darkened last year, cloud’s pay-as-you-go model gave organizations a lever to optimize workloads and trim monthly costs. When a global pandemic dispersed the workforce, cloud became the foundation for the virtual office.
Now, organizations are turning to the hyperscalers for in-demand generative AI capabilities and enterprise-grade LLMs.
“Organizations deploying generative AI services will look to the public cloud, given the scale of the infrastructure required,” Nag said.
In addition to delivering ready-to-use models via AI marketplaces, businesses are calling on cloud providers to address affordability, safety, sustainability and governance concerns.
“Hyperscalers that support these needs will be able to capture a brand-new revenue opportunity as [generative AI] adoption grows,” said Nag.
While infrastructure and platform services are expected to see the highest year-over-year revenue bump — 27% and 22%, respectively — growth will continue across all cloud categories, the report said.
Vendors will deliver industry cloud solutions, which Gartner expects 70% of enterprises to adopt by 2027, through training and tuning LLMs for specific use cases.
Generative AI “models that are applicable across diverse industry verticals might require significant customization, affecting scalability and cost-effectiveness,” Nag said in the report.
“Public cloud providers can position themselves as partners in the responsible and tailored adoption of generative AI by building on the same approaches applied to industry clouds, sovereign clouds and distributed clouds,” added Nag.
As hyperscalers battle for market share, companies transformed by cloud adoption are now helping to transform the cloud business.
“Cloud was driving outcomes,” Nag said.
But, with initial migrations complete, companies are eager for ROI.
“Companies want their cloud provider to support them in whatever direction they want to take their business,” Nag said. “The cloud providers have to respond to those needs.”
