Executive Summary
Hyperscale cloud carried a great deal of momentum into 2022, but turbulent macroeconomic and geopolitical conditions and the lingering effects of a global pandemic have started to take its toll. The recent quarter saw growth slow in a number of pockets. AWS’s hot streak was stopped and the Chinese clouds continue to perform sluggishly. The current bumps do not mean the category is being pushed off its overall trajectory. AWS still grew at nearly 37% y/y, Oracle is near 50% y/y and Microsoft and Google are holding steady in the 40-50% y/y range. And our new five-year projection has the sector growing at a five-year CAGR of 33.7% through 2027.
An important question around hyperscale is where the growth is going to come from to sustain these kinds of numbers. The answer can be broken down along three lines: 1) legacy workloads; 2) global markets; and 3) value-add. Internal legacy workloads at the hyperscalers is driving uptake in cloud infrastructure and the opportunity around legacy enterprise workloads is gradually being untapped. Global markets represent significant long-term upside and hyperscale platforms are only at the early stages of addressing this demand. Finally, perhaps the most important source of growth is going to come from uptake in value-add from existing customers. The game continues to shift away from raw cloud infrastructure and to toolsets, services and capabilities around edge and distributed architectures. As customers adopt these products and services, they not only drive revenue, but enhance the margin profile.
This report provides comprehensive growth rate projections and total revenue estimates for the world’s nine hyperscale cloud platforms on a five-year basis. Included are geographic splits and a total market summation. This latest version also features a refresh of our hyperscale cloud region and interconnection node tracking. Hyperscale cloud is projected to reach ~$728b in value in 2027, with a five-year CAGR of ~33.7%.
