- Amazon revealed it has an AWS backlog that's larger than its current cloud revenue run rate
- CEO Andy Jassy thinks AI will drive continued rapid growth
- Synergy Research Group forecast the worldwide cloud market will double again in the next four years
When it comes to earnings season, most other media are preoccupied with revenue and profit. But there was one figure that stood out to us in Amazon’s Q2 2024 earnings: its titanic backlog for cloud services.
In one sentence toward the end of Amazon’s call, VP of Investor Relations David Fildes revealed the company has a backlog for AWS services of $156.6 billion. That figure, he said, was up 19% year on year. From Amazon's perspective that's a good thing.
For context, that number is nearly one and a half times larger than AWS’ current annual revenue run rate, which stood at roughly $105 billion as of the end of Q2.
Executives on the call didn’t provide a service breakdown for the backlog. But it’s fair to say that when CEO Andy Jassy said he believes AWS still has a long runway ahead of it, he did so with confidence.
During the call, Jassy noted that about 90% of global IT spend still goes toward on-premises deployments. But “if you believe that equation is going to flip, which I do, there's a lot of growth ahead of us in AWS,” Jassy said. “I also think that generative AI itself and AI as a whole is going to be really large.”
As we noted previously, Amazon has already said it has a multi-billion revenue run rate for its AI services. Jassy reiterated that on the call and hinted that he expects AI revenue to grow even faster than its cloud services. And that’s saying something considering AWS revenue jumped 18.8% in Q2 to $26.3 billion.
“Unlike the non-AI space, where you're basically taking all of this infrastructure that's been built on-premises over a long period of time and working with customers to help them migrate it to the cloud – which is a lot of work, by the way – in the generative AI space, it's going to get big fast and it's largely all going to be built from the get-go in the cloud,” he said.
Moving the market
Obviously, Amazon isn’t the only cloud provider benefitting from the AI boom. Data from Synergy Research Group showed the worldwide cloud market grew 22% year on year in Q2 to $79 billion.
Amazon’s market share ticked up 1% to 32% and Google Cloud also gained ground, increasing its share from 11% to 12%. Microsoft increased its market share slightly year on year to 23%, but that figure was down sequentially from 25% in Q1.
Notably, Synergy’s team said Oracle’s market share surpassed IBM’s in Q2. Oracle is now tied in 5th place with Salesforce with 3% market share each. Both companies sit behind Alibaba with its 4% share.
“For the third successive quarter, annual growth was 20% or more, resulting in quarterly spending on cloud services now approaching the $80 billion mark,” Chief Analyst John Dinsdale wrote in an email. “It has taken thirteen quarters for the market to double from $40 billion, and Synergy forecasts show that it will double again within the next four years.”