Cloud Giants Ride the AI Wave: From Oracle’s Surge to Billion-Dollar Startups, the Golden Era of Cloud Computing is Here

In a gold rush, sell shovels and let the miners go bust. The AI equivalent of shovels is computer chips, and they have been at the front of AI’s growth — but cloud providers are right behind.

Oracle’s (NYSE:ORCL) massive 55% stock price increase this year highlights the excitement around AI’s potential to benefit cloud computing and storage providers.

• This week, Oracle reported a 54% growth in cloud sales — up from 45% the previous quarter.
• Oracle’s CEO said, “Gen2 Cloud has quickly become the No. 1 choice for running Generative AI workloads.”

The cloud industry has slowed in recent years, with a pullback in IT spending. But that’s quickly changing as AI puts a spotlight back on the cloud.

Catalyst: Large language models powering AI generate a huge amount of data — which needs to be stored somewhere. Enter: the cloud.

Forecast: Google’s former head of AI and cloud (UncoverAlpha) says AI cloud spending is “on the verge of having a market explosion,” and spending could go from $10B to $100B in a few years.

What else will help drive that growth?

Massive investments into AI startups. In the first quarter this year, generative AI startups have raised over $1.7B — and just this week, four-week-old Mistral AI raised $113M to challenge OpenAI.

The hype is real: Whether these startups fail or not, a large portion of that funding goes to cloud spending. And there’s enough to go around for the three largest cloud giants: Amazon (Amazon Web Services), Microsoft (Azure), and Alphabet (Google Cloud).