Infrastructure as a service (IaaS) is an essential and increasingly popular cloud computing service. In 2025, IaaS is poised for significant growth in key global markets. Below, our industry report explores some of the key trends, issues and trends for investors – highlighting key players and rising stars to consider for your portfolio strategy.
Market Overview: IaaS
IaaS is considered one of four components of cloud computing, alongside platform as a service (PaaS), software as a service (SaaS), and serverless. The worldwide market is considerable. In 2024, global market capitalisation stood at $108.34 billion. This is up from $94.85 billion in 2023, representing a compound annual growth rate (CAGR) of 14.2%.
Over the coming years, growth is expected to accelerate further. By 2028, the market could reach $212.34 billion (18.3% CAGR). The market can be divided into multiple segments. IaaS falls into many verticals by industry, including IT & telecom, healthcare, retail & e-commerce, BFSI, manufacturing, and education.
Healthcare is expected to experience the highest CAGR as more providers move their IT infrastructure to the cloud. North America is highlighted as the biggest region for IaaS market capitalisation ($58.37 billion). However, the Asia Pacific region is noted for the fastest adoption of faster internet connections (e.g. 4G). In 2025, South America, India and China are also set to experience higher growth in digitisation.
Key Features & Market Trends
IaaS offers a huge advantage to businesses across the globe – access to stored data to anyone with an internet connection. It is no longer necessary for many firms to have their own on-site data storage facilities (with their security risks and high associated costs). In particular, startups find IaaS solutions invaluable due to their rapid deployment and scalability requirements.
COVID-19 has also left its legacy. Businesses still recall the days of working from home and the need to maintain robust systems and processes for remote working. The 2020 pandemic led to more firms adopting cloud computing solutions, such as IaaS. With these solutions now “baked into” their business architecture, businesses have become more comfortable and reliant on this way of storing, labelling and tracking information.
2025 is set to witness some important developments in IaaS. Many firms are turning to artificial intelligence (AI) to explore the opportunities in AI-Powered Cloud. Here, AI is not simply another service “running” on the cloud platform. Rather, AI is the driving force behind its operations – helping to drive smarter processes and automations. The results are expected to include lower costs for firms, improved efficiency and higher performance levels.
Counterbalancing some of these trends, there is also evidence of firms shifting to hybrid (or multi-cloud) strategies. Whilst businesses are very attracted to the cost savings, scalability and flexibilities of IaaS, many are keen to avoid the risks of vendor lock-in. Some are seeking to address this by blending public cloud services from various providers, helping them achieve greater agility and redundancy in a rapidly evolving market.
Key Players & New Entrants
With over half of global IaaS capitalisation in North America, it is hardly surprising that the key players are predominantly from the US. These include familiar names like AWS (Amazon Web Services), Microsoft Azure, Google Cloud and IBM. However, Asia also boasts some notable players such as LayerStack (Hong Kong), Gigenet (HK) and Alibaba Cloud (China).
Amidst these large players, some exciting startups have been emerging in IaaS. These often provide unique business models – or target specific customer segments with unique cloud computing needs – to occupy neglected areas in the IaaS space, which large companies may struggle to pivot to. A fascinating example is NexGen Cloud. Marketed as the “Airbnb of cloud computing”, this IaaS firm leans into scalable GPU cards (instead of large CPU data centres). The solutions are 100% powered by renewable energy, and the company is now showing a unique way to deploy AI-powered cloud solutions without a highly negative impact on the environment.
Risks & Opportunities
IaaS, like other areas of cloud computing, remains beguiled by hacking challenges. Data breaches can happen, especially when enterprises have installed software poorly. In IaaS, the cloud provider is responsible for securing the infrastructure (e.g. physical data centres). Customers are responsible for securing their data, applications, and access controls. When customers misunderstand this relationship, it can lead to cybersecurity vulnerabilities.
The main opportunity of IaaS, of course, is the forecasted CAGR over the coming years. By including suitable IaaS shares in their portfolio, investors can fuel the computing power needed for AI, machine learning, big data analytics, IoT, and blockchain applications. Moreover, IaaS providers operate on subscription or pay-as-you-go models, ensuring predictable and recurring income streams. Customer retention also tends to be high. As such, finding a stronger IaaS candidate for your portfolio could allow you to benefit from high margins even in a downturn.
If you are interested in expanding your portfolio into these kinds of exciting spheres of investing, then we invite you to get in touch with us here at Bure Valley and consider joining our exclusive investor network:
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