Last quarter, hyperscalers increased their 💎 customer revenue commitments to a staggering $370Bn, with AI emerging as the undisputed cloud catalyst. Let's unpack key insights and what this means for the industry:
📊 The Numbers: A $22Bn+ Surge in 90 Days
Amazon Web Services (AWS): $156.6Bn(-$1.1B QoQ)
Microsoft Azure ~$134.5Bn* (+$17Bn QoQ)
Google Cloud: $78.8Bn (+$6.3Bn QoQ)
Total: $369.9Bn
* Conservative estimate: 50% of Microsoft's total commercial backlog
As the collective revenue backlog continues to grow, Azure is noticeably catching up with AWS. Last quarter, AWS's headstart was $40Bn; this quarter, it's "only" $22Bn ahead. The real spread might be even smaller, given our conservative Azure estimate.
֎ AI: From Buzzword to Multi-Billion-Dollar Business
All three hyperscalers cited AI as a major growth driver, with both Microsoft and AWS touting AI as a multibillion-dollar revenue run-rate business.
Azure was the most specific, attributing 8% of its 29% growth to AI (up from 7% last quarter and 6% the quarter before). Microsoft also reported AI service demand exceeding their capacity, signaling significant growth potential as infrastructure scales.
AWS's CFO Brian Olsavsky highlighted that customer demand for AI services is "amplifying" AWS cloud sales.
🎙️ AI Dominates the Conversation
Even as hyperscalers continue to massively increase their infrastructure spend, AI discussions dwarf mentions of capex. In this quarter's earnings calls, AI was mentioned a staggering 168 times across Amazon, Microsoft, and Alphabet - more than 4X the mentions of capital expenditures.
One of the reasons is AI's future potential, as emphasized by Amazon's CEO: "In the generative AI space, it's going to get big fast and it's largely all going to be built from the get-go in the cloud..."
🤝 Partnerships as a Competitive Edge
Strategic collaborations, like Google Cloud's partnership with Oracle signed in June '24, continue to open new avenues for growth. This partnership offers customers seamless integration of Oracle's database services with Google's AI capabilities.
🎯 Data is Essential
AWS and Microsoft CEOs recently re-emphasized that data is critical to leveraging AI. Companies with clean, cloud-ready data are now ahead in AI adoption.
Amazon's CEO noted: "When we work directly with customers, as well as with systems integrator partners, everyone is in a hurry to get going on generative AI, and one of the first questions we ask is 'show us where your data is, show us what your data lake looks like...'"
💡 This surge of AI-driven cloud adoption creates a critical need for partners who can help enterprises unlock value from their cloud investments.
A substantial share of the $370Bn will be spent on cloud marketplaces - are you scaling your growth there?
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