Synergy said five neocloud companies are now among the world’s top 30 cloud providers by infrastructure services revenue
In sum – what to know:
Growth moderating – Synergy expects cloud growth rates to ease over time, although absolute revenue increases are expected to remain strong.
AI demand – AI is driving growth across IaaS, PaaS, hosted private cloud and SaaS offerings.
Neocloud impact – Emerging AI-focused cloud providers are increasing competition and expanding market capacity and choice.
The global cloud infrastructure market has surpassed a half-trillion-dollar annual revenue run rate, but maintaining its current pace of growth will become increasingly challenging as the market continues to expand, according to Synergy Research Group.
While enterprise spending on cloud infrastructure services grew 35% year over year in the first quarter of 2026, Synergy Research Group chief analyst John Dinsdale said future growth rates are likely to moderate as the market scales.
“You are up against the law of large numbers here. The bigger a market gets, the more difficult it is to maintain high growth rates,” Dinsdale told RCR Wireless News. “That is one of the things that has been most remarkable about the recent increase in cloud market growth rates. But looking at our forecast, the growth rates will inevitably drop off a bit. The growth in absolute dollar value will remain extremely strong, but the percentage growth rate will tail off.”
According to Synergy, enterprise spending on cloud infrastructure services reached $128.6 billion in the first quarter, up more than $35 billion from the same period a year earlier. The result equates to an annual revenue run rate exceeding $500 billion. The 35% year-over-year increase marked the ninth consecutive quarter of accelerating growth and the highest growth rate recorded since the fourth quarter of 2021, according to the research firm.
Amazon remained the largest cloud provider with a 28% market share in the first quarter, followed by Microsoft with 21%, and Google with 14%. Public infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) offerings accounted for most of the market and grew 38% year over year.
AI continues to reshape cloud demand across multiple service categories, according to Dinsdale. “One of the key things about AI is that it impacts services across the board. It drives IaaS through GPUaaS and associated compute services; it drives PaaS through AI-oriented platform services; it drives hosted private cloud through enhanced infrastructure. And beyond cloud infrastructure services, it drives the SaaS market through a range of subscription-based AI software products,” he said.
The rise of AI workloads has also contributed to the emergence of neocloud providers. Synergy said five neocloud companies are now among the world’s top 30 cloud providers by infrastructure services revenue. Companies including CoreWeave, OpenAI, Oracle, Crusoe, Nebius, Anthropic, and ByteDance recorded some of the highest growth rates among second-tier providers.
Dinsdale said the growing presence of neoclouds is changing the competitive landscape. “There is absolutely no doubt that neocloud firms have shaken things up, bringing more capacity and investment into the industry, and bringing more choice to the market. Competition is nearly always a good thing to drive market development,” Dindsdale said.
Synergy reported strong cloud growth across all regions. The United States remained the largest market, growing 37% year over year, while India, Indonesia, Ireland, Taiwan, Thailand, and Malaysia were among the fastest-growing countries when measured in local currencies.
