Canalys analysts Yi Zhang and Rachel Brindley have revealed that the expansion of AI models played a crucial role in driving cloud adoption in 2024, contributing to a 20 percent increase in cloud infrastructure spending.
Global cloud infrastructure services spending has reached $86 billion in Q4 2024, marking a 20 percent increase.
For the full year, spending on cloud infrastructure services also rose 20 percent to $321.3 billion, driven largely by AI adoption. Cloud hyperscalers saw strong AI-driven growth, though capacity constraints led to a supply-demand imbalance.
How AI contributed
AI applications significantly boosted the performance of top cloud providers, prompting hyperscalers to expand investments in cloud and AI infrastructure. However, strong AI-driven demand outpaced supply, leading to capacity constraints that created a tight supply-demand balance.
Cloud providers responded by increasing capital expenditures to support AI model training, deployment, and cloud-based applications. AWS, Microsoft, and Google committed record-breaking investments, with spending expected to exceed $100 billion, $80 billion, and $75 billion, respectively, in 2025.
AI competition intensified as cloud vendors integrated new AI models, including DeepSeek R1, which gained rapid adoption due to its cost efficiency and high performance. The evolving AI landscape continues to shape cloud innovation, fueling further investments and accelerating cloud adoption globally.
Top Cloud service providers
AWS, Microsoft Azure, and Google Cloud maintained their positions as the top providers, holding a 64 percent combined market share. AWS grew 19 percent year over year, while Microsoft Azure and Google Cloud faced slight slowdowns due to supply limitations.
“The adoption of DeepSeek R1 by leading cloud providers highlights its disruptive impact, challenging industry norms with its cost efficiency and high performance,” said Rachel Brindley, Senior Director at Canalys in a report.
“As AI evolves, new models will continue to emerge, driving innovation and competition across the ecosystem. Vendors are responding swiftly, ensuring seamless access for customers to explore and integrate the best options,” Rachel Brindley said.
Amazon Web Services (AWS) maintained its dominance in the global cloud market with a 33 percent share and 19 percent year-on-year revenue growth, surpassing $100 billion in cloud infrastructure revenue for 2024. AWS introduced AWS Nova, a foundation model on Bedrock, and integrated DeepSeek R1 into Amazon Bedrock and SageMaker in early 2025. To keep pace with AI and machine learning advancements, AWS shortened the lifespan of certain servers and networking equipment while committing over $1 billion to AI-focused data centers in Ohio and Georgia.
Microsoft Azure held a 20 percent market share in Q4 2024, achieving 31 percent annual growth, with AI services contributing 13 percent and growing 157 percent year on year. Azure integrated OpenAI’s GPT-o1, a multimodal model supporting text and visual inputs, and added DeepSeek R1 to Azure AI Foundry and GitHub’s model catalog. Microsoft expanded globally, completing three Azure availability zones in Saudi Arabia for 2026 operations and planning a $700 million investment in Poland’s cloud and AI infrastructure by mid-2026.
Google Cloud retained its 11 percent market share, with strong 32 percent annual growth and a revenue backlog of $93.2 billion at the end of 2024. First-time commitments more than doubled from 2023. Google launched Gemini 2.0, its most advanced multimodal AI model, fully powered by TPUs, with four variants available via Gemini API on Google AI Studio and Vertex AI. The company expanded its global footprint by launching its forty-first cloud region in Mexico, adding to existing regions in Chile and Brazil.
Baburajan Kizhakedath
