Gartner: Global public cloud end-user spending is expected to reach nearly $600 billion in 2023

Cloud drives digital business transformation through emerging technologies like generative AI

April 27, 2023 –  According to Gartner’s latest forecast, global end-user spending on public cloud services will grow from US$491 billion in 2022 to US$597.3 billion in 2023, an increase of 21.7% . As organizations seek change through emerging technologies such as generative artificial intelligence (AI), Web3, and the Metaverse, cloud computing has become the engine that drives digital business to the next stage.

Sid Nag, research vice president at Gartner, said: "Hyperscale cloud providers are accelerating the implementation of their own cloud plans. Today, enterprise organizations regard the cloud as an important strategic platform to promote digital transformation, which requires cloud providers to adapt to the increasingly fierce competition. Digital services compete to provide more advanced capabilities.”

Nag said: "Large language models (LLMs), such as those supporting generative AI, require powerful, highly scalable computing power to process data in real time. The cloud provides the perfect solution and platform, so the key to this generative AI race is It’s no coincidence that the major players are hyperscale cloud providers.”

All segments within the cloud market are expected to experience growth in 2023. Infrastructure as a Service (IaaS) is expected to achieve the highest end-user spending growth in 2023 at 30.9%, followed by Platform as a Service (PaaS), which is expected to grow by 24.1% (see Table 1).

Source: Gartner (April 2023)

Gartner predicts that by 2026, 75% of enterprise organizations will adopt a digital transformation model based on the cloud as the underlying platform . 

Nag said: "Customer experience, digital and business outcomes, and this 'virtual first' world will drive a new round of IaaS growth. Emerging technologies such as chatbots and digital twins that help enterprises interact more closely with customers in real time will rely on Cloud infrastructure and platform services to meet the growing demand for computing power and storage capabilities.”

While cloud infrastructure and platform services have the highest spending growth rates, SaaS remains the cloud segment with the highest end-user spending. SaaS spending is expected to grow 17.9% to reach $197 billion in 2023.

Nag said: "The underlying technology of cloud computing is firmly controlled by hyperscale cloud providers, but leadership of the commercial application layer is more dispersed. The demand faced by providers is to use cloud native capabilities, embedded AI and composability to reinvent the wheel." Designing SaaS products to increase productivity, especially as business technicians have increasing influence and control over budgets, will ignite a new wave of innovation and substitution in the cloud platform and application market.”

Gartner clients can learn more in "Worldwide Public Cloud Services Forecast, 2021-2027, First Quarter 2023 Update."