Cloud revenues up 35% YoY in a hot market that’s accelerating

Cloud service provider revenues worldwide for the first quarter of 2026 were up by $35bn year-on-year (YoY) and reached $129bn, according to data from US-based datacentre and cloud market analysts Synergy Research Group, which takes into account the hyperscalers – Amazon Webs Services (AWS), Google Cloud and Microsoft – plus tier two providers that include artificial intelligence (AI-)focused neoclouds, as well as more general cloud providers.

The market is accelerating quickly – possibly driven by AI deployments – when comparing run rate with actual trailing 12-month revenues. Q1 2026 was the ninth successive quarter in which YoY growth increased, attaining 35%.

According to the Synergy data, cloud service revenues have hit their highest growth rate since the fourth quarter of 2021, when the market was 40% of its current size. That swelling of revenues could be down to AI driving major changes in the cloud market.

The hyperscalers maintain a strong lead in the market, with Amazon in top position – however, Microsoft and Google achieved substantially higher growth rates, with their Q1 worldwide market shares 28%, 21% and 14% respectively.

Among tier two cloud providers, those with the highest growth rates include CoreWeave, OpenAI, Oracle, Crusoe, Nebius, Anthropic and ByteDance. Based on cloud infrastructure service revenues, five neocloud companies are now among the top 30 cloud providers.

Synergy estimates that – with the majority of major cloud providers having now released earnings data for Q1 – quarterly cloud infrastructure service revenues were $128.6bn, with trailing 12-month revenues reaching $455bn. Those include IaaS, PaaS and hosted private cloud services.

With historical – i.e. trailing 12-month revenues of $455bn – and a run rate of $514.4bn calculated from this year’s Q1, the $59.4bn difference shows how quickly the market is accelerating, equating to an acceleration delta of 13%.

“The Q1 market is now fifteen times larger than it was a decade ago and continues to expand at 35% annually,” said John Dinsdale, chief analyst at Synergy Research Group. “Reaching a half-trillion-dollar run rate underscores the far-reaching impact of cloud computing and AI on the IT landscape.

“Our forecasts point to sustained strong growth in the years ahead, with AI continuing to drive usage, unlock new use cases and boost cloud provider revenues. At the same time, the competitive landscape is evolving, with neoclouds playing an increasingly significant role and already accounting for 5% of the total cloud market and a substantially larger share of AI-focused segments.”