Cloud Commits Hit $380Bn: Inside Hyperscalers' Growth Engine
Cloud Commits Hit $380Bn: Inside Hyperscalers' Growth Engine
Hi, it's Roman - welcome back to the Partner Insight newsletter!
This week's analysis reveals a compelling acceleration in enterprise cloud commitments, now exceeding $380 billion – particularly striking as it comes on top of hyperscalers' already robust revenue growth. This dual acceleration signals profound shifts in how enterprises are approaching technology procurement and AI investments, with far-reaching implications for alliance leaders and Cloud GTM strategies.
But before we dive in, I'm thrilled to invite you to our major cloud marketplace online event on November 13th: "Scale Your Growth with AWS Marketplace in 2025". We'll feature keynotes from Lewis Howarth, Worldwide Leader of AWS Marketplace Adoption, and Jay McBain, Chief Analyst at Canalys, alongside 10+ exceptional speakers who will help you prepare for re:Invent and accelerate marketplace growth in 2025.
Cloud Commits Hit $380Bn: Full Breakdown
Customer cloud commits across 3 hyperscalers just reached a new high of $380Bn this quarter. Their growth accelerated to 25% YoY, surging $76Bn in the last 12 months alone.
This marks an accelerated shift in how enterprises approach cloud spending, AI, and software procurement. Let’s break down the key drivers and performance insights for each hyperscaler.
📊 Breaking Down the Commits
AWS: The Dominant Force
Commitments: $164Bn (up $7.4Bn from last quarter)
Growth of commits: 23% YoY
AWS maintains its leadership position with the largest commitment base, showing sustained momentum despite its scale
Google Cloud: The Acceleration Story
Commitments: $86.8Bn (up $8Bn QoQ)
Growth of commits: 34% YoY
GCP achieved the quarter's biggest jump of >10% in their commits amount this quarter, while also showing 35% revenue growth. Incredible.
Microsoft Azure: The Steady Climber
Commitments: $129.5Bn (estimated as 50% of total Microsoft Cloud)
Trajectory: Slight decline $5Bn QoQ, after last quarter's surge to $134.5Bn
Despite a slight dip this quarter, MSFT still shows impressive 22% YoY growth in commits on the annual basis.
The Bigger Picture
The acceleration in cloud commitments to >25% YoY signals growing customer confidence in cloud migration and strategic positioning for AI infrastructure access. This acceleration is particularly noteworthy as it comes on top of already massive commitment bases.
Notably, customers are increasingly leveraging these commitments on cloud marketplaces to buy third-party software, further consolidating their software spend within the top three cloud ecosystems.
Let's examine key insights from 3 clouds on their growth, AI traction and CapEx investments:
📈 Revenue Growth: More Room for Acceleration
It's fascinating that despite these impressive growth in revenue and commits numbers, hyperscalers indicate they could grow even faster if not for capacity constraints, particularly in AI infrastructure. This suggests the current growth might be understating actual market demand.
AWS: Redefining Scale
AWS's performance is impressive at its size. As CEO Andrew Jassy notes:
“AWS grew 19.1% year over year and now stands at a $110 billion annualized run rate. We've seen significant reacceleration of AWS growth for the last four quarters.”
Jassy's telling comment on further growth acceleration potential:
“I believe we have more demand that we could fulfill if we had even more capacity today. I think pretty much everyone today has less capacity than they have demand for, and it's really primarily chips that are the area where companies could use more supply… I actually believe that the rate of growth there has a chance to improve over time as we have bigger and bigger capacity.”
Microsoft Azure: AI-Fueled Growth
Azure achieved 33% growth this quarter, with AI contributing a substantial 12 points. Even excluding AI, core Azure services are growing at 21% - outpacing AWS but not dramatically.
Microsoft's CFO highlighted the growth and scale of long-term commitments. They saw “growth in the number of $10 million-plus contracts for both Azure and Microsoft 365” and “an increase in the number of $100-million-plus contracts for Azure”.
“Azure growth included roughly 12 points from AI services similar to last quarter. Demand continues to be higher than our available capacity. Non-AI growth trends were also in line with expectations in total and across regions as customers continued to migrate and modernize on the Azure platform.”
On future growth: “We expect the contribution from AI services to be similar to last quarter, given the continued capacity constraints as well as some capacity that shifted out of Q2. And in H2, we still expect Azure growth to accelerate from H1 as our capital investments create an increase in available AI capacity to serve more of the growing demand.”
Google Cloud: The Growth Momentum
Google Cloud's momentum is very compelling, as they achieved 35% growth:
“This business has real momentum and the overall opportunity is increasing as customers embrace GenAI. We generated Q3 revenues of $11.4 billion, up 35% over last year with operating margins of 17%.
Our technology leadership and AI portfolio are helping us attract new customers, win larger deals and drive 30% deeper product adoption with existing customers.”
⚡ AI: The Growth Multiplier
The scale and pace of AI adoption is growing rapidly across hyperscalers. Here is a break it down:
AWS: Triple-Digit Growth in AI
AWS's AI business is striking. As its CEO highlighted:
“AWS's AI business is a multibillion-dollar revenue run rate business that continues to grow at a triple-digit year-over-year percentage and is growing more than 3x faster at this stage of its evolution as AWS itself grew."
Two internal examples of AI adoption stand out:
“In the last 18 months, AWS has released nearly twice as many machine learning and gen AI features as the other leading cloud providers combined.”
Real impact example: “Amazon Q, the most capable generative AI-powered assistant for software development and to leverage your own data. … saved Amazon's teams $260 million and 4,500 developer years in migrating over 30,000 applications to new versions of the Java JDK.”
Microsoft Azure: Fastest Route to $10B
Microsoft's AI momentum is perhaps the most dramatic among the three.
“We're excited that only 2.5 years in, our AI business is on track to surpass $10 billion of annual revenue run rate in Q2. This will be the fastest business in our history to reach this milestone.”
“Azure OpenAI usage more than doubled over the past 6 months”
GitHub “Copilot enterprise customers increased 55% quarter-over-quarter”
Google Cloud: AI Everywhere
Google's approach stands out for its focus on widespread AI integration and operational efficiency. Their key metrics tell a compelling story:
Scale: “Gemini API calls have grown nearly 14x in a 6-month period.”
Internal adoption: “Today, more than 1/4 of all new code at Google is generated by AI, then reviewed and accepted by engineers. This helps our engineers do more and move faster.”
Breadth: “Today, all seven of our products and platforms with more than two billion monthly users use Gemini models. That includes the latest product to surpass the two billion user milestone, Google Maps”
Google has achieved remarkable efficiency gains, highlighting a potential for more cost efficient AI:
“Since we first began testing AI overviews, we have lowered machine cost per query significantly. In 18 months, we reduced cost by more than 90% for these queries through hardware, engineering and technical breakthroughs while doubling the size of our custom Gemini model.”
💰 CapEx: The Infrastructure Arms Race
The massive capital expenditure by hyperscalers signals their conviction in future demand and future growth of their ecosystems. Let's analyze their investments:
AWS: Leading the Pack
Q3 CapEx reached $22.6B, up significantly from $17.6B in Q2.
But it's their forward-looking commitments that are truly eye-opening:
“We expect to spend about $75 billion in 2024. I suspect we'll spend more on that in 2025. And the majority of it is for AWS and specifically, the increased bumps here are really driven by generative AI…
the faster we grow demand, the faster we have to invest capital in data centers and networking gear and hardware.” - highlighted CEO
Microsoft Azure: Matching Demand Signals
Microsoft's Q3 CapEx reached $20 billion including financial leases ($14.9 billion excluding leases), demonstrating their commitment to infrastructure expansion.
They continue to invest, seeing growing demand:
“We expect capital expenditures to increase on a sequential basis, given our cloud and AI demand signals. As I said last quarter, we will stay aligned and, if needed, adjust to the demand signals we see.”
Google Cloud
Q3 CapEx: $13.1B
Investment focus:
"Our reported CapEx in the third quarter was $13 billion, reflecting investment in our technical infrastructure, with the largest investment being in servers, followed by data centers and networking equipment.”
Their near-term outlook maintains this pace:
"Looking ahead, we expect quarterly CapEx in the fourth quarter to be at similar levels to Q3" (suggesting another $13B in Q4)
For 2025, they signal continued growth: "And as we think into 2025, we do see an increase coming in 2025... likely not the same percent step-up that we saw between '23 and '24, but additional increase."
What this all means for Cloud GTM leaders
This accelerated growth of hyperscalers, coupled with the surge in cloud commits, growing AI adoption, and their unprecedented level of CapEx investment, points to further market consolidation around top hyperscalers.
With cloud commits growing faster than ever, hyperscalers are effectively locking in future growth. This reinforces their marketplaces as critical channels for software distribution.
The question for cloud GTM leaders isn't whether to align with hyperscalers' marketplace strategies, but how to optimize their positioning as these massive investments in infrastructure come online. How are you adapting your strategy to capitalize on this transformation?
Free Online Event: Scale Your Growth with AWS Marketplace in 2025
Thrilled to invite you to our 🏆 major cloud marketplace online event of the year on November 13th and welcome our exceptional keynote speaker: Lewis Howarth, Worldwide Leader of AWS Marketplace Adoption.
Given AWS's leading role in Cloud GTM, this event in collaboration with Amazon Web Services (AWS) is set to be packed with insights and will help prepare for the highly anticipated re:Invent in December.
Few leaders understand growing on AWS Marketplace better than Lewis Howarth who for over a decade has been leading teams across the organization within AWS.
He’s been at the forefront of the disruption happening in procurement teams, working closely with numerous ISVs and consulting partners (CPs) to help them navigate and take advantage of this change.
Lewis brings unique insights into accelerating AWS Marketplace adoption through three key principles:
👌 Normalization: Making AWS Marketplace transactions as natural as traditional procurement
🌊 Frictionless: Removing barriers between buyers and sellers via AWS Marketplace
🎯 Mainstream: Positioning AWS Marketplace at the center of enterprise software buying
He highlights that cloud Marketplaces are growing faster than ever and underscores the growing adoption of channel-first ISVs on AWS Marketplace.
The result? More delighted customers. The "Power of 3" is proving an essential piece in any 2024 strategy, as AWS + ISVs + Channel set the tone for more frictionless co-sell.
Don't miss this rare opportunity to learn directly from the Worldwide Leader of Marketplace Adoption at AWS Marketplace.
But there's more.
📢 We've assembled an exceptional lineup of speakers:
In addition to the Lewis keynote, in "Scale Your Growth with AWS Marketplace in 2025" event, you'll learn from:
Keynote from Jay McBain, Chief Analyst in Canalys on marketplace evolution and opportunities for ISVs and partners
Panel on how to Expand your Global Presence with AWS Marketplace
Panel on How ISVs use AWS Marketplace & Channel Partners for rapid growth
Each panel will include 5 leaders from AWS and ISVs to help you learn strategies for Global Expansion & Channel Acceleration that top performing companies use.
📅 Join us on November 13, 9-11 AM PT
In just 2 hours, 12 top experts will share insights that could transform your cloud GTM strategy and accelerate growth with AWS Marketplace.
The timing is strategic - just a few weeks before re:Invent 2024. You'll get the latest insights on AWS's marketplace and can focus on what matters most at re:Invent and in 2025.
This event is FREE - share it with others who could benefit.
See you there!
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