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Microsoft Azure grew 26% year-over-year during Q2 2023

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The analyst company Canalys has announced that Microsoft Azure saw 26% growth during the second quarter compared to the previous year. That growth put it behind Google Cloud which saw 31% growth year-over-year (YoY) but ahead of Amazon Web Services (AWS) which only saw growth of 12% YoY.

Overall, Canalys believes worldwide cloud infrastructure services spending increased by 16% to $72.4 billion during the quarter. AWS, Microsoft Azure, and Google Cloud accounted for 65% of the spending in the market and collectively they grew 20% YoY, down from 22% growth in the first quarter.

AWS and Microsoft both saw a deceleration in growth, Google Cloud’s growth rate remained stable compared with the previous quarter, at 31%.

Ever since the fourth quarter of 2021, these three giants' growth rates have generally been going down. While this is partially due to the market maturing, the economic issues businesses are facing are also playing a part.

Canalys said that cloud infrastructure services providers need to see a significant influx of new customers and workloads to continue driving revenue growth. It noted that AI technology is increasing cloud workloads and is set to ‘fuel massive demand for computing capacity’ creating growth opportunities.

It pointed out that both AWS and Microsoft have launched AI partner programs in the second quarter showing that they recognize the importance of demand from AI.

In May of this year, NVIDIA’s share price managed to reach $380 on the back of the AI boom powered by services like ChatGPT. Booms like this have so far helped to prop up the US stock market, so it will be interesting to see whether that trend continues.

Even if individual stocks like NVIDIA’s are overpriced, the demand for cloud infrastructure services to power more and more AI applications constantly coming online is not likely to go away. Microsoft will certainly be hoping for the demand to continue so it can continue growing.

Source: Canalys

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