Cloud spending is growing rapidly with a predicted 21.4% increase in 2025

Tristan Collins
Cloud spending is growing rapidly with a predicted 21.4 increase in 2025
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Cloud spending is growing rapidly, with Gartner predicting a rise from $595.7 billion in 2024 to $723.4 billion in 2025, a 21.4% increase. While this growth rate is impressive, the details reveal a more complex picture.

Gartner highlights growth across four major categories: Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Software as a Service (SaaS), and Desktop as a Service (DaaS). Among these, SaaS remains the largest segment, projected to generate $299.1 billion in 2025. IaaS and PaaS, which have grown steadily since the pandemic, are also expected to see notable increases. However, DaaS continues to underperform, contributing only a small fraction of the total cloud spend.

Interestingly, Gartner has excluded certain areas, such as cloud management, security services, and Business Process as a Service (BPaaS), from its forecasts. These categories previously represented tens of billions in revenue but are no longer included in the reported figures, raising questions about their future impact.

IaaS, which includes compute, storage, and networking, has been revised downward for 2024, with revenue projections dropping from $180 billion to $169.8 billion. Despite this adjustment, IaaS is still expected to grow significantly, with AI servers likely driving much of this demand.

PaaS spending has closely followed IaaS trends over the years, reaching near parity in recent years. Gartner reports that infrastructure and platform services are increasingly sold as bundles, referred to as Cloud Infrastructure and Platform Services (CIPS). This bundled approach now represents over 70% of IaaS and PaaS revenues and is expected to grow further, reflecting the integrated nature of modern cloud platforms.

Meanwhile, the cost advantages of cloud services are being scrutinized. Businesses that once saw the cloud as a cheaper alternative are now re-evaluating their strategies due to narrowing cost margins. Some companies are even considering a return to local infrastructure for better control and cost efficiency.

While SaaS continues to dominate the cloud market, other categories like DaaS lag behind. Gartner’s forecast suggests that without a shift in how DaaS is perceived and used, it may remain a niche offering.

Looking ahead, cloud platforms like Amazon Web Services, Microsoft Azure, and Google Cloud are solidifying their roles as comprehensive ecosystems. These platforms aren’t just service providers but have become the technological foundation for businesses worldwide. The decisions companies make about cloud providers now go beyond cost and efficiency—they shape entire IT strategies.

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Tristan has a strong interest in the intersection of artificial intelligence and creative expression. He has a background in computer science, and he enjoys exploring the ways in which AI can enhance and augment human creativity. In his writing, he often delves into the ways in which AI is being used to generate original works of fiction and poetry, as well as to analyze and understand patterns in existing texts.