The cloud services market has been a stable and mature industry in recent years, facilitating a widespread shift to working from home. However, the disruptive potential of AI in the industry has triggered competition among service providers according to a new report by research and analysis company GlobalData.

GlobalData’s Thematic Intelligence: Cloud Computing report explores key themes affecting the cloud computing industry, unpacking a variety of technological, macroeconomic, and regulatory trends. The report also contains key industry metrics such as patent and company filing trends alongside forecasts of market size and growth.  

Impact of AI

The powerful catalyst of generative AI has prompted a race within the cloud services sector to provide the best AI platforms and services. Despite cloud vendors’ previous interest in developing customer AI chips to assist with GPUs from NVIDIA and AMD, in the platform-as-a-service (PaaS) and software-as-a-service (SaaS) sectors of the industry, interest in the potential benefits of using AI has become increasingly prevalent over the last year.

The report identifies a significant partnership of Microsoft with Open AI and AWS’s partnership with Anthropic as examples of the growing trend for cloud vendors and AI start-ups to partner.

As AI is embraced, cloud providers must stay aware of the evolving regulatory landscape. The EU’s AI act was provisionally agreed in December 2023, limiting use cases and requiring adequate reporting. Other jurisdictions are also looking to develop regulations to ensure safe and trustworthy AI, meaning cloud providers will have to be conscious of abiding by regulatory updates.

High growth rate for PaaS

GlobalData forecasts that the total cloud computing market will reach $1.4 trn in 2027, growing at a compound annual growth rate of 17.1% from $638.6 bn in 2022.

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Although SaaS is the largest segment at 40% of the market in 2023, it is forecast to have a slower growth rate of 17.4% compared to PaaS which could grow at a rate of 21.7% until 2027. This predicted higher growth rate is due to the adoption of containerisation and microservices technology.

Microservices are an architectural approach to software development in cloud computing. Despite delays in the adoption of this architecture due to configuration complexities, innovations of new tools and frameworks have triggered intrigue from cloud providers to integrate mesh technologies into management solutions.