The worldwide infrastructure as a service (IaaS) public cloud market grew 22.5% in 2024, reaching $171.8bn, according to Gartner, driven by the push AI.

Amazon retained the number one position in the IaaS market in 2024, followed by Microsoft, Google, Alibaba, and Huawei.

In 2024, the top five IaaS providers accounted for 82.1% of the market. Amazon continued to lead the worldwide IaaS market with revenue of 64.8 billion and 37.7% market share, followed by Microsoft with 23.9% market share. Google (9%), Alibaba Group (7.2%), and Huawei (4.3%) maintained their respective positions year-over-year.

“As enterprises continue to seek greater flexibility, improved resilience and optimized performance, there is sustained demand for cloud migration and modernization services,” said Hardeep Singh, Principal Analyst at Gartner.

“Enterprises want to transform their IT infrastructure by leveraging multiple platforms for AI and prioritizing modernization by migrating existing workloads to the cloud. They are also deploying cloud-native applications across diverse environments.” This trend is further fueled by the demand for flexibility with data residency and sovereignty, as enterprises seek to gradually transition to the cloud while keeping control over their data and operations.

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“Cloud providers are investing heavily in AI infrastructure and capabilities to become leaders in the rapidly evolving AI-optimized IaaS market. They expect that AI will become a much larger revenue contributor in the future, even though it currently remains a relatively small slice of their overall revenue within the IaaS space,” said Singh.

“Emerging AI-optimized IaaS offerings from nonhyperscalers, or GPU as a service (GPUaaS) providers, though still nascent, have also played a key role in addressing immediate capacity requirements by offering flexible, high-performance compute on demand.”

Amazon and Microsoft have recently faced more regulatory pressure, however, when it comes to their cloud dominance. The UK Competition and Markets Authority has been recommended to take swift action on the two company’s dominance in the cloud sector.