Executive Summary
Hyperscale cloud continues to work through a challenging environment, but there are signs developing that a bottom has been reached and things will start to push forward and possibly accelerate going forward. More than one hyperscaler reported improving conditions as attrition slowed, rationalistions got closer to reaching a ceiling and overall demand began to re-emerge. The deceleration that began last year has slowed top-line revenue growth, but did little to reshape the underlying fundamentals. This is a sector that is built on a solid foundation and the recent turbulence has done little to knock it off course.
As the sector positions to get back into gear, on the horizon is the advent of AI, which has the potential to take things to another level. The demand is real, but has not fully materialised as supply chain issues persist and the requisite inventory has not been fully built out. It is not hyperbole to say that the sector is at an inflection point. Infrastructure builds, hyperscale architectures and pricing models are all being reconsidered as the sector prepares for what is expected to be a growth wave similar, if not beyond, what was seen in the last decade with public cloud infrastructure.
In this period of deceleration and emerging stabilisation, it is interesting how there have been differences in trajectories across the respective clouds. The Chinese clouds continue to struggle, while the four US-based clouds have kind of separated into two camps when it comes to recent trends. Microsoft and Oracle have carved out a favourable position to win AI business and seem to be taking advantage early, with more immediate signs of stabilisation. Meanwhile, AWS and Google have been more exposed to weaker parts of the landscape and may be slightly behind the other two when it comes to turning things around.
Despite differences in trajectories, the general patterns for this category are similar and can be seen in the numbers. This report provides comprehensive growth rate projections and total revenue estimates for the world’s seven 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 ~$524.2b in value in 2028, with a five-year CAGR of ~23.4%. The five-year CAGR is expected to fall in this range for the near-term as the sector continues to recover from this recent period of deceleration
