Big 3 Public Cloud Providers Remain Bullish on AI Prospects

The Big Three public cloud providers — Amazon Web Services (AWS), Microsoft, and Google — are seeing new opportunities for future growth as interest in artificial intelligence ramps up.

The public cloud providers all revealed in the past week just how much money the cloud is continuing to bring in. Microsoft reported its financial earnings on July 25, with revenue from the company's Intelligent Cloud unit coming in at $24.0 billion, a 15% gain over the same period in 2022. Alphabet and its Google business unit reported on the same day that cloud revenues are up 28% for the year to $8 billion. The last to report was Amazon on Aug. 3. For its second-quarter fiscal 2023, Amazon reported AWS revenue of $22.1 billion, a 12% year-over-year gain.

Related: AWS, Azure, and GCP: 4 Major Areas in Which They Differ

"The current economic climate has crimped some growth in cloud spending, but the market continues to expand at a healthy rate despite those short-term challenges," Synergy Research Group wrote in a research note. "Among the largest cloud providers, Google and Microsoft had the stronger year-on-year growth numbers, resulting in both increasing their worldwide market share by a percentage point from the second quarter of last year."

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AI Is Growing the Total Addressable Market for Cloud

During his company's earnings call, Google CEO Sundar Pichai rarely mentioned cloud without mentioning AI in the same breath.

Related: AI's Impact on Cloud Computing: 5 Ways AI Will Reshape the Cloud Industry

For Google, AI is a driver for more cloud consumption.

"It is an exciting moment overall in cloud because there is definitely a lot of interest from customers on AI, and they definitely are engaging in many more conversations with us," Pichai said. "When I think about it long term, I view the AI opportunity as expanding our total addressable market and allowing us to win new customers and scale investments that we can directly bring to cloud."

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Over at Microsoft, CEO Satya Nadella also mentioned AI alongside cloud at every possible opportunity.

"Every customer I speak with is asking not only how but how fast they can apply next-generation AI to address the biggest opportunities and challenges they face and to do so safely and responsibly," Nadella said.

Amazon Focuses on Cost Reductions and AI

Amazon CEO Andy Jassy also made sure to repeatedly mention AI in relation to the cloud, but that wasn't his only focus.

"As the economy has been uncertain over the last year, AWS customers have needed assistance cost-optimizing to withstand this challenging time and reallocate spend to newer initiatives that better drive growth," Jassy said. "We've proactively helped customers do this."

Jassy noted that Amazon has heard consistently from customers that they want more price-performant ways to do generalized compute. To enable that, Amazon designed its own general-purpose CPU chips. Jassy said that currently more than 50,000 customers use AWS' Graviton chips, and these chips have about 40% better price/performance than other leading x86 processors.

The need for custom silicon in the cloud also carries through to AI. Amazon developed its own custom AI chips for training called Trainium and for inference called Inferentia.

"We're optimistic that a lot of large language model training and inference will be run on AWS' Trainium and Inferentia chips in the future," Jassy said.