Cloud Revenues Saved By The GenAI Boom

November 3, 2025 Timothy Prickett Morgan

Growth in spending by end users on the clouds was slowing and slowing even more as time went by as we expect in a mature and competitive market from the end of 2021 through the end of 2022. And based on the trends that were happening at that time, about this time growth would have probably slowed to maybe 2X to 3X of the growth in global gross domestic product, which is how you know (in my opinion) how a subset of the IT market is mature.

IT markets tend to always grow faster than GDP, unless something weird is going on, like a wiggly, long wave product cycle of a captive market like IBM’s Power Systems and System z are.

Anyway, GenAI came along and has reinvigorated cloud spending, particularly on GPU-accelerated systems but also for systems that are augmented with proprietary XPUs such as TPUs from Google or Trainiums from Amazon Web Services, to name the two dominant ones out there on the market today. Look at how this growth curve for cloud revenues worldwide turned on a dime in Q3 2023, according to data compiled by Synergy Research:

This is what happens when the big clouds get their hands on almost all of the Nvidia GPUs in the world for more than two years and before the big AI model builders such as OpenAI and Anthropic have no figured out they need to commission their own datacenters and buy or build their own accelerators to cut out the middleman – that would be Nvidia and AMD as well as Google, Microsoft, and AWS – to save money.

But transitioning to homegrown XPUs for GenAI takes time, and that is the one thing the model builders do not have, so they are buying or renting any GPU or XPU they can get their hands on and buying whatever ones they can find. Nvidia is making 5X as many GPUs, and the world wants to consume 10X or 15X compared to the prior generation – and maybe even more. And it is driving cloud revenues like crazy.

Synergy says that cloud revenues worldwide were $106.9 billion in the third quarter of 2025, and this figure includes infrastructure, platform, and hosted private cloud services. The global market grew by 27 percent year on year, from $84.2 billion in Q3 2024, and was up 7.5 percent sequentially from Q2 2025. This was a record-breaking sequentially growth rate, and this will probably not be the last time this happens in the coming year or two, with revenues for rentals of GPU-accelerated instances tripling year on year.

In the third quarter, AWS had a 29 percent share of the market, Microsoft Azure had 20 percent share, and Google Cloud had 13 percent share. Microsoft and Google are gaining on AWS, which used to consistently have more than a third of the market.

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