Cloud service and infrastructure market revenues have reached $427 billion in the first half of 2024, according to a report from Synergy Research Group.

This is up by 23 percent compared to the first half of 2023.

Cloud infrastructure spending overtakes cloud service growth

Artificial intelligence (AI) has driven up investments in cloud data center infrastructure and as a result, its growth rate has overtaken that of cloud services revenue.

Historically, the growth rate in cloud services revenues has far outpaced spending on cloud data center infrastructure, according to the report.

Spending on public and private cloud data centers witnessed a growth of 30 percent on average. Services such as Internet-as-a-service (IaaS), Platform-as-a-service (Paas), and Software-as-a-service (Saas) grew by an average of 21 percent.

However, the cloud services market remains twice the size of cloud data center infrastructure spending.

The report added that in addition to AI, hyperscalers have also driven up cloud data center infrastructure spending through data center expansion.

Compared to H1 2023, the operational capacity of the hyperscale data center network has grown by 24 percent, with the size of future pipeline data centers growing by 47 percent.

Big three lead in services, Nvidia chases for hardware top spot

Across the cloud services market, Microsoft, AWS, Google, and Salesforce are the market leaders.

A report published earlier this year said AWS, Microsoft, and Google dominated the public cloud market in all parts of the world, bar China.

On the hardware side, ODMs (original design manufacturers) account for a large portion of the market share, as hyperscalers opt for their own-designed servers.

Beyond the ODMs, Dell, Microsoft, Super Micro, and HPE lead. However, Nvidia is rapidly growing by selling directly to hyperscale operators.

The US takes first place for its cloud market, accounting for 44 percent of all cloud service revenues, 53 percent of hyperscale data center capacity, and 47 percent of the market for cloud data center hardware and software.

Across all markets, US companies also reign supreme and are followed by Chinese companies, which account for eight percent of all cloud service revenues and 16 percent of hyperscale data center capacity.

“One interesting aspect of this is the way in which it is changing the structure of the supply side of the industry. Over the last ten years, ODMs have continued to eat up server market share, and now we see Nvidia’s explosive growth, which is largely fueled by sales to hyperscalers, either directly or indirectly. In the first half, revenues from Nvidia’s data center business unit far surpassed the combined revenues of Dell and HPE in data centers,” said John Dinsdale, a chief analyst at Synergy Research Group.

In its latest earnings report, Nvidia posted revenues of $30 billion. However, shares in the company fell six percent on the revenue beat.