In the second quarter of 2025, the global cloud computing market is about to reach a crucial milestone. According to Synergy Research Group, cloud infrastructure revenue reached $98.8 billion, representing a year-on-year growth of approximately 25%. However, cloud service providers are also simultaneously increasing their capital expenditures (Capex) to cope with the continuously growing demand, especially the surging demand for computing power and storage brought about by generative AI (GenAI).
The revenues of the three major cloud giants have grown strongly, with AWS still in the lead.
Hyperscalers contributed the lion's share of cloud computing revenue this quarter, amounting to approximately $63 billion to $65 billion. Among them, AWS led the pack with $30.9 billion in revenue, representing a year-on-year growth of 17.5%. Google Cloud generated $13.6 billion in revenue, a 32% increase. Although Microsoft did not disclose Azure's revenue separately, based on what an AWS executive said during the earnings call and considering Microsoft's previously announced annual revenue of $75 billion for Azure, its quarterly revenue is estimated to be between $18 billion and $20 billion.
Although AWS's growth rate was lower than that of Google Cloud (39%) and Microsoft Azure (32%), Amazon CEO Andy Jassy explained that AWS has a larger customer base and its quarterly growth is subject to volatility. John Dinsdale, chief analyst at Synergy, said: "Although the cloud computing market is about to reach a quarterly scale of $100 billion, the annual growth rate remains around 25%, and it is expected to maintain an average annual growth rate of over 20% in the next five years. GenAI further amplifies this already large and fast-growing market."
Capital expenditure has soared, with order backlogs reaching $669 billion.
The rapid growth of cloud computing is also accompanied by huge capital expenditures. In the second quarter of 2025 alone, the capital expenditures of AWS, Google Cloud, and Microsoft reached as high as 78 billion US dollars, mainly used for building new data centers, purchasing chips, and enhancing computing power. Google Cloud even raised its full-year capital expenditure forecast for 2025 by 10 billion US dollars.
Overall industry spending is higher, with other cloud service providers such as Oracle and CoreWeave also increasing their investments. However, supply still cannot meet demand. The total backlog of orders for the three major cloud giants has reached 669 billion US dollars, and all have stated that current market demand far exceeds available capacity. Google and Microsoft predict that the supply shortage will continue until the end of 2025.
GenAI drives long-term growth, but challenges remain.
The explosive growth of generative AI is a key driver for the continuous expansion of the cloud computing market. Cloud service providers not only need to offer the computing power required for AI training and inference, but also optimize their storage, network, and data management capabilities. However, high capital expenditures and supply chain constraints (such as GPU shortages) remain challenges for the industry.
Synergy predicts that although the market growth rate may slow down slightly in the next few years, cloud computing will remain one of the most steadily growing markets in the technology industry. With the popularization of AI applications and the development of emerging technologies such as 6G and edge computing, the investment boom in cloud service providers is unlikely to cool down in the short term.
