Cloud Spending to Surge Next Year – MegaCap Beneficiaries (MSFT, GOOG, AMZN)

In an era where the cloud has become a cornerstone for the digital strategies of businesses, Gartner, the world-renowned research and advisory company, forecasts a significant surge in worldwide end-user spending on public cloud services. The projected total is estimated to reach a staggering $723.4 billion in 2025, a considerable increase from the $595.7 billion expected in 2024.

With Amazon's AWS currently holding a market share above 30%, Microsoft's Azure at 25%, and Alphabet's Google Cloud 11%, two thirds of the market is held by three of the Magnificent 7 stocks.

The adoption of public cloud services is accelerating as organisations of varying sizes and industries seek to capitalize on the scalability, agility, and cost-efficiency that cloud computing provides. Gartner envisions that 90% of organizations will have adopted a hybrid cloud approach within the next five years, highlighting the strategic importance of cloud services in modern-day business operations.

As the move towards hybrid cloud environments picks up pace, one pressing challenge that businesses need to address within the next year is data synchronisation across the cloud. This challenge is fundamental to maintaining data integrity, seamless workflows, and operational efficiency in a hybrid cloud setting.

Gartner's report goes further to detail the anticipated growth across all segments of the cloud market, all of which are expected to experience double-digit growth rates in 2025. A significant growth rate of 21.5% is particularly stand-out for the public cloud services market as a whole for the specified year. This growth trajectory underscores the exponential demand and reliance on cloud technologies.

Drilling down into specifics, the cloud infrastructure and platform services (CIPS) segment is projected to witness a growth spike of 24.2% in 2025, which would position its market value at roughly $301 billion. CIPS offerings are expected to represent 72% of IT spending on Infrastructure as a Service (IaaS) and Platform as a Service (PaaS), emphasising the market's shift toward structured and integrated platforms that make development, deployment, and operations more efficient.

The complexities associated with managing workloads have nudged organisations towards the efficiencies offered by CIPS. They provide integrated platforms that simplify and consolidate essential tasks, and it is this need for optimized workload management that is driving the substantial spending in cloud infrastructure and platform services.

Furthermore, Gartner maintains that the growth trajectory of public cloud services spending worldwide will continue to be shaped by industry-specific and vertical-specific generative artificial intelligence (GenAI) models in 2025. As organisations look to leverage the power of AI for bespoke and contextually relevant solutions, it's evident that public cloud services will remain a vibrant and growing market, catering to the nuanced needs of global industries.

Gartner's forecast not only underscores the increasing reliance on public cloud services but also throws light on the evolving landscape where hybrid clouds and AI-integrated models are set to redefine the technological infrastructure of tomorrow's businesses. As industries continue to embrace digital transformation, the cloud market's growth trajectory stands as a testimonial to innovation and adaptability in the corporate world.