Cloud Computing and XaaS Developments (May–June 2025)

In May and June 2025, the cloud computing industry – spanning Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS) – witnessed significant news and developments. This report organizes the key highlights of this period, including major announcements (mergers, acquisitions, partnerships, funding), market forecasts from industry analysts, financial results of leading providers, new technological launches, expert commentary, and emerging trends in areas like AI integration, sustainability, edge computing, and multi-cloud strategies. All sources and expert insights are cited for reference.

Major Announcements, Mergers, and Partnerships (May–June 2025)

• Salesforce’s $8B Acquisition of Informatica: In one of the biggest SaaS deals of the year, Salesforce announced a definitive agreement to acquire data management firm Informatica for $8 billion ciodive.com. Salesforce CEO Marc Benioff said the acquisition will create “the most complete, agent-ready data platform in the industry,” integrating Informatica’s AI-powered data governance tools into Salesforce’s Data Cloud and Tableau analytics platforms ciodive.com. This move is aimed at accelerating Salesforce’s AI-driven growth and follows the industry trend of enterprise software providers shoring up their data and AI capabilities via M&A ciodive.com ciodive.com. (Notably, Salesforce reported 120% YoY growth in its Data Cloud and AI segment in early 2025, underlining the strategic importance of AI “agent” platforms ciodive.com.)
• Microsoft and xAI Partner on Grok AI Models: In mid-May (at Microsoft Build 2025), Microsoft unveiled a partnership with Elon Musk’s AI startup xAI to host its Grok 3 and Grok 3 Mini large language models on Azure. Microsoft became one of the first hyperscalers to offer managed access to Grok via the Azure AI Foundry service techcrunch.com. Azure customers can now use Grok models with full Azure service-level agreements and billing through Microsoft techcrunch.com. Musk’s Grok model is controversial for its “edgy” and less-filtered responses, but on Azure the models are more locked down and come with enterprise data integration and governance features techcrunch.com techcrunch.com. This partnership deepens Microsoft’s AI offerings on Azure and exemplifies the cloud giants’ race to support diverse AI models.
• Red Hat and AMD Expand Hybrid Cloud AI Partnership: On May 22, Red Hat (IBM’s open-source subsidiary) and chipmaker AMD announced an expanded collaboration to optimize AI workloads in hybrid cloud environments icloud.pe. The partnership aims to modernize virtualized infrastructure and give organizations more options for running AI and data-intensive applications across on-premises and cloud systems. As AI usage grows, so does demand for data and compute across hybrid deployments icloud.pe. This Red Hat–AMD tie-up is intended to leverage AMD’s high-performance processors and Red Hat’s OpenShift/Kubernetes platform to improve AI workload performance in hybrid clouds icloud.pe.
• IBM and Oracle Cloud Team Up on AI: IBM is also extending its AI reach through a cloud partnership with Oracle. Announced May 9, IBM will integrate its watsonx AI tools into Oracle Cloud Infrastructure (OCI) icloud.pe. This lets businesses deploy and manage IBM’s AI models and “AI agents” on OCI, benefiting from Oracle’s scalable cloud while using IBM’s AI software. The goal is to simplify running AI agents and applications across platforms icloud.pe. This unusual collaboration between IBM and Oracle underscores the importance of cross-cloud integration as enterprises seek to run AI where it makes most sense.
• Kyndryl and Microsoft Expand Distributed Cloud Services: Kyndryl (the IT services spin-off of IBM) announced on May 15 an expanded partnership with Microsoft to enhance distributed cloud, hybrid, and edge services for customers icloud.pe. Kyndryl is adding new services that help companies manage multicloud, hybrid cloud, and edge/IoT environments using Microsoft’s cloud stack icloud.pe. The update is designed to fit into companies’ existing IT setups and “juggle hybrid, multicloud, edge, and IoT systems” more easily icloud.pe. This reflects the demand for integration services that span multiple clouds and on-prem infrastructure.
• Other Notable Deals: Equinix (a global data center colocation provider) acquired three data centers in Manila, Philippines in June, expanding its Asia-Pacific footprint to support the region’s growing digital economy xyzreality.com. In the cloud ERP arena, Acumatica agreed to be acquired by Vista Equity Partners (announced May 29) to fuel its growth as a SaaS ERP provider acumatica.com. Additionally, cybersecurity M&A continued: for example, Fortra acquired Lookout’s cloud security (SSE) business in May fortra.com, indicating ongoing consolidation in cloud security services.

Market Forecasts and Industry Analyses

Industry analysts and research firms released fresh data and predictions during this period, painting an optimistic picture for cloud and XaaS growth:

• Surging Cloud Demand (ISG & Synergy Data): Cloud spending has reaccelerated in 2024–2025 after a sluggish 2023, driven in large part by AI. Information Services Group (ISG) reported that global cloud services annual contract value hit record levels in late 2024, calling it a “complete turnaround from the down market… in 2023” businesswire.com. ISG’s president Steve Hall noted enterprises are “reaccelerating their cloud migrations and looking to the cloud to power their AI ambitions,” which is “great news for the big three hyperscalers” businesswire.com. ISG forecasts cloud-based XaaS revenues will grow 18% in 2025, far outpacing traditional IT services (+4.5%) businesswire.com. This aligns with data from Synergy Research Group for Q1 2025: global enterprise spending on cloud infrastructure services reached $94 billion in Q1, up ~23% year-on-year (nearly 25% in constant currency) srgresearch.com. According to Synergy, the cloud market has grown 52% since the end of 2022, an astonishing expansion rate srgresearch.com. Synergy’s chief analyst John Dinsdale highlighted AI as a major growth driver, noting generative AI services grew 140–160% year-over-year and have boosted overall cloud growth by ~7 percentage points since ChatGPT’s debut srgresearch.com srgresearch.com. In fact, by Q1 2025 AI-related workloads already account for roughly 6% of cloud providers’ revenues and climbing businesswire.com.
• Public Cloud Market Share Shifts: New market share figures show the top providers maintaining leadership but with shifting shares. Amazon Web Services (AWS) remains the largest cloud provider globally, though its share has edged down. In Q1 2025 AWS held about 29% of worldwide cloud infrastructure spend (down from ~31% a year prior) crn.com crn.com. Microsoft Azure grew to roughly 22% share (up from 20–21%), and Google Cloud rose to 12% share srgresearch.com. Combined, AWS, Azure, and Google now capture 63–68% of the global cloud infrastructure market crn.com srgresearch.com. Notably, some “tier-2” cloud providers are growing even faster in niche areas – Synergy identified CoreWeave, Oracle, Databricks, Snowflake, Cloudflare, and Huawei among the fastest-growing, with CoreWeave (a GPU-focused cloud) “on the verge of breaking into the top 12” after coming from nowhere two years ago srgresearch.com srgresearch.com. These shifts illustrate how booming AI demand is benefitting not just the big three but also specialized cloud players.
• Forecasts for Future Growth: IDC and Gartner have likewise issued bullish projections. IDC’s latest Worldwide Public Cloud Spending Guide (updated mid-2025) forecasts that global public cloud spending will more than double between 2024 and 2028, implying a sustained ~20% CAGR over the period techblog.comsoc.org techblog.comsoc.org. By 2027, IDC projects public cloud services spending will reach $1.35 trillion, with the U.S. ($697B) and Western Europe ($273B) as the top regions and SaaS as the largest segment (around 40% of spend) techblog.comsoc.org techblog.comsoc.org. Meanwhile, Gartner is zooming in on the AI boom: it predicts worldwide generative AI spending will soar 76% in 2025 to reach $644 billion cdomagazine.tech rcrwireless.com. Interestingly, Gartner finds about 80% of that GenAI investment will go into hardware (devices and servers) – reflecting massive cloud data center build-outs – with relatively less on software/services venturebeat.com venturebeat.com. This underscores that much of the cloud’s growth in the coming years will be fueled by infrastructure expansion to support AI workloads.
• Industry Analyses – Sovereign Cloud and Data Centers: An Omdia “Market Radar” report (April 2025) examined the rise of sovereign cloud solutions, noting that Western cloud giants (AWS, Azure, Google, IBM, Oracle) still account for 86% of the public cloud market icloud.pe. However, concerns over data sovereignty are driving new offerings and partnerships in Europe (see the June 2 story on European providers “playing the sovereign card” to counter the U.S. CLOUD Act) icloud.pe. On the data center front, CBRE released research in late May showing record demand in Europe – projected uptake of 855 MW of colocation capacity in 2025, a 22% YoY increase and the fastest growth in four years xyzreality.com. Major hubs like London and Frankfurt lead, and despite challenges (power and land shortages), hyperscalers’ AI needs are fueling unprecedented expansion xyzreality.com. This mirrors the trend in the U.S., where data center construction is booming (but as noted below, raising sustainability concerns in water-stressed regions).

In summary, analysts agree that cloud and “XaaS” services are in a robust growth phase in 2025, powered especially by enterprise digital transformation and AI. The competitive landscape is evolving with new challengers and a heavy emphasis on infrastructure scale.

Financial Updates from Major Cloud Providers

The top cloud service providers reported strong financial results in the spring of 2025, with most showing accelerating cloud revenue growth and highlighting AI as a tailwind:

• Amazon Web Services (AWS): AWS’s Q1 2025 revenue was $29.3 billion – a new record – which represented +17% year-over-year growth crn.com. This marked an improvement from its mid-2024 growth rates, though slightly below analyst forecasts (Amazon had projected ~17.4% growth) icloud.pe. Amazon’s CFO noted some softness early in the quarter but an uptick in March as optimization headwinds eased. Despite ceding a bit of market share, AWS remains the #1 IaaS provider globally with ~29–30% share crn.com crn.com. Amazon’s leadership stressed that massive investments in AI infrastructure are underway to meet demand (e.g. new data center regions and custom AI chips). Investors continue to watch AWS’s profit margins, but the unit’s $29B+ quarterly revenue underscores its central role in Amazon’s business.
• Microsoft Azure: Microsoft does not break out pure Azure revenue, but its Intelligent Cloud segment (which includes Azure and related services) posted $26.8 billion in revenue in the Jan–Mar 2025 quarter, up 21% year-over-year crn.com. Importantly, Microsoft disclosed Azure and other cloud services grew roughly 27–33% YoY in that quarter (exact figure varying with constant currency) fortune.com msdynamicsworld.com. This growth outpaced AWS’s and led to Azure modestly gaining share (now ~22% of the global market) srgresearch.com. Microsoft’s CEO Satya Nadella attributed the strength to “AI-driven transformation” boosting demand for Azure services msdynamicsworld.com – in fact, AI services contributed 12+ points of Azure’s growth as customers adopt Azure OpenAI Service, GitHub Copilot, and other AI offerings microsoft.com. Microsoft’s cloud momentum, plus cost discipline, contributed to better-than-expected earnings. The company is also investing heavily in capacity for AI: Microsoft’s capital expenditure guidance for the rest of 2025 was raised significantly to deploy new GPU clusters for Azure.
• Google Cloud: Google Cloud (which includes Google’s cloud platform and Workspace) reported $12.3 billion in revenue for Q1 2025, up 28% year-on-year crn.com. This was the fastest growth among the big three and continued an upward trajectory (Google Cloud was ~$10B/quarter a year prior). Notably, Google Cloud reached operating profitability for recent quarters, a milestone it first hit in 2024. Google’s CEO Sundar Pichai said growth was driven by strong uptake of its data analytics and AI platform offerings (e.g. BigQuery and Vertex AI), and highlighted multi-cloud capabilities like Anthos as a differentiator. With 12% global market share crn.com, Google Cloud remains the third-largest player but is steadily closing the gap with Azure. Alphabet’s earnings call in late April emphasized an “AI-first” approach – Google is infusing generative AI across its cloud products (e.g. new Duet AI assistants for Workspace) to win more enterprise customers.
• Oracle Cloud: Oracle Corp has been an aggressive challenger in both SaaS and IaaS. Oracle’s fiscal Q4 2025 (March–May) results, released June 2025, showed total cloud revenue jumping 27% YoY to $6.7 billion for the quarter nasdaq.com. This includes Oracle’s Fusion and NetSuite SaaS applications as well as Oracle Cloud Infrastructure (OCI) services. Especially noteworthy was OCI’s performance – Oracle’s cloud infrastructure revenue soared 52% in Q4, as demand far outstripped supply constellationr.com. Oracle’s executives revealed that its cloud backlog (RPO) grew 41% to $138B, and that it is investing heavily to build data centers to fulfill orders nasdaq.com nasdaq.com. CEO Safra Catz stated Oracle spent $9.1B in capex in the quarter and expects to spend over $25 billion in FY2026 on cloud infrastructure expansion (up from $21B in FY25) to meet customer demand nasdaq.com nasdaq.com. These investments pressured Oracle’s short-term cash flow, but Catz emphasized, “we are putting out as much capacity as we possibly can… all to meet demand” nasdaq.com. Oracle founder Larry Ellison touted that Oracle’s database and multi-cloud offerings give it a unique edge for enterprises integrating AI, predicting dramatic growth ahead as Oracle enables companies to use their data with any AI model (whether OpenAI’s, Musk’s Grok, etc.) on Oracle Cloud nasdaq.com nasdaq.com. Oracle’s strong cloud growth and bullish outlook indicate it is successfully carving out a growing share, particularly via database-as-a-service and by courting AI workloads in partnership with NVIDIA, OpenAI, and others.
• Other Providers: Among other notable players, IBM reported that its hybrid cloud revenue (including Red Hat) was up modestly in the first half of 2025, but its focus is on AI for business – IBM’s strategy centers on providing AI software (watsonx) on any cloud rather than competing in pure IaaS. Alibaba Cloud, the leader in China, did not publicly break out Q1 2025 numbers in this period; however, Alibaba’s last reported quarter (Q4 2024) saw ~$4.3B in cloud revenue (+13%) crn.com crn.com, and it continues overseas expansion (new data centers in Mexico and Thailand opened earlier in 2025 icloud.pe icloud.pe). IBM Cloud and Tencent hold smaller global shares (~2% each) crn.com, but there were instances of large enterprises expanding usage of those clouds (e.g., BNP Paribas deepened its IBM Cloud adoption to boost resilience icloud.pe). The broader “as-a-service” market (including SaaS applications) also remains healthy – for example, Oracle noted its strategic back-office SaaS suite grew 20% to a $9.3B annualized run-rate in Q4 nasdaq.com, and ServiceNow and SAP have been making AI-related enhancements to their cloud software (ServiceNow even acquired an AI data startup in May ciodive.com). Overall, the financial data across providers in Q1/Q2 2025 underscores strong double-digit cloud growth across the board, with AI uptake acting as a rising tide lifting most providers.

Technological Developments and Product Launches (IaaS, PaaS, SaaS)

The period saw a number of significant technology announcements and product/service launches in cloud infrastructure (IaaS), platforms (PaaS), and software (SaaS):

• Hyperscale Infrastructure Investments: Cloud giants are heavily investing in new infrastructure. On June 5, Amazon announced a $10 billion plan to build new AWS data centers in North Carolina focused on supporting generative AI workloads icloud.pe. This massive project – the largest tech investment in that state’s history – will create multiple data center campuses and add 500+ jobs in cloud engineering abcnews.go.com. Amazon said the expansion is crucial to “boost its AI and cloud computing capabilities” amid a race to add capacity for AI models abcnews.go.com abcnews.go.com. North Carolina’s government welcomed the move, while experts noted that data centers of this scale require enormous power and water resources, urging state-of-the-art sustainability practices in their design abcnews.go.com abcnews.go.com. Similarly, Microsoft announced a $400 million investment to expand its cloud and AI infrastructure in Switzerland icloud.pe, continuing its trend of growing regional cloud footprints (this followed Microsoft launching its first Azure cloud region in Malaysia on May 29, featuring multiple availability zones to serve Southeast Asia’s needs icloud.pe). These expansions illustrate how cloud providers are racing to add regional capacity worldwide – not only to improve performance and compliance for customers, but also to handle the explosive compute demand of AI services.
• New Cloud Services and Solutions: Cloud vendors rolled out a variety of new services in May–June:
  • Azure AI and Agents: At Microsoft Build 2025 (May 19–20), Microsoft showcased a raft of AI-centric updates to its developer cloud offerings. It introduced Azure AI Foundry Models, a curated hub where developers can access over 1,900 AI models (including the newly added xAI Grok 3 models hosted as first-party on Azure) to build and customize AI applications blogs.microsoft.com. Microsoft also announced the general availability of Azure AI Foundry’s Agent Service, enabling developers to orchestrate multiple AI agents with enterprise-grade controls blogs.microsoft.com. New tools like a “Model Leaderboard” (for model performance benchmarking) and Entra Agent ID (for giving every AI agent a unique identity for governance) were unveiled blogs.microsoft.com blogs.microsoft.com. In essence, Microsoft is positioning Azure as the platform of choice for building the “open agentic web,” where organizations can securely deploy custom AI agents at scale blogs.microsoft.com blogs.microsoft.com. These announcements reflect how PaaS offerings are evolving to support AI/ML developers – from integrated coding assistants (GitHub Copilot updates) to sophisticated multi-agent frameworks.
  • IBM’s watsonx on OCI: As mentioned, IBM’s expanded partnership with Oracle means IBM’s watsonx AI toolset (for building AI models and foundation models) is now available on Oracle Cloud Infrastructure icloud.pe. This effectively gives Oracle Cloud users access to IBM’s AI platform capabilities, and conversely lets IBM reach Oracle’s customer base – a notable example of cloud interoperability. It shows how platform-as-a-service players are partnering to fill gaps: IBM brings AI expertise, Oracle brings cloud scale, and together they aim to help enterprises run AI workloads across hybrid multi-cloud environments more easily.
  • Dell’s “Private AI Cloud” Solutions: Dell Technologies, traditionally a hardware vendor, made waves with a new approach to private cloud. On May 22, Dell announced it is offering a private cloud solution that is hardware-agnostic, allowing customers to build on-premise clouds using their choice of software stack (VMware, Red Hat, Nutanix, etc.) on Dell hardware icloud.pe. Branded as Dell Private Cloud, this service breaks from the conventional vendor-lock approach – “without locking users in” to a single platform icloud.pe. Additionally, Dell unveiled an “AI in a box” concept dubbed Dell AI Factories, described as plug-and-play on-premises systems with all necessary servers, storage and software to run AI workloads on-site xyzreality.com. The aim is to let enterprises bring cloud-like AI infrastructure into their own data centers (for privacy or latency reasons) while still leveraging Dell and partners for ease of deployment. These moves by Dell highlight an industry trend of cloud technology being delivered on-premise in a more flexible consumption model (often termed “cloud at customer” or “distributed cloud”).
  • SaaS Application Innovations: SaaS providers continued to infuse AI into their products. For example, Salesforce (even apart from the Informatica acquisition) expanded its “Einstein GPT” and “Agentforce” capabilities, allowing customers to build AI-driven workflows in CRM. ServiceNow launched an AI-powered “Agent Orchestrator” in May to automate enterprise service tasks ciodive.com and acquired a data management startup to bolster its platform ciodive.com. Meanwhile Adobe and Google Workspace both introduced new generative AI features (Adobe’s Firefly AI for content creation, Google’s Duet AI for office productivity). While these specific SaaS feature updates are numerous, the common theme is the integration of generative AI into cloud software offerings has accelerated markedly during this time.
• Regional and Industry-Specific Clouds: We also saw growth in specialized cloud offerings. Huawei Cloud held an APAC conference in May (“Go Together, Grow Together”) with over 400 partners, outlining how it is embedding AI to enable industry-specific solutions in Asia icloud.pe. Chinese cloud giants Huawei, Alibaba, and Tencent are expanding in emerging markets like the Middle East – a report noted they align closely with local regulations and priorities to challenge U.S. providers in those regions icloud.pe icloud.pe. On the government front, there’s continued interest in sovereign cloud: European cloud providers (like France’s OVHcloud or Germany’s T-Systems) are collaborating to offer cloud services that keep data under national jurisdiction icloud.pe. For example, initiatives under the EU’s Gaia-X framework progressed in this timeframe, though U.S. providers also launched their own “sovereign controls” for European customers. These developments underscore that one size does not fit all in cloud – providers are tailoring offerings by region and industry, whether for compliance (sovereignty), low-latency edge use cases, or vertical expertise.

In summary, the tech launches in late spring 2025 show an industry in overdrive to support AI workloads and hybrid flexibility. From hyperscale data centers and AI model hosting to on-premises cloud appliances and cross-cloud integrations, the boundaries between traditional IaaS, PaaS, and SaaS are blurring. Cloud companies are effectively moving toward a continuum of services: centralized public clouds, distributed/edge clouds, and AI services available anywhere the customer needs.

Emerging Trends and Expert Outlook

Several key emerging trends in cloud computing were evident in May–June 2025 news, often highlighted by experts and whitepapers:

AI Integration in Cloud Services

The most defining trend is the deep integration of Artificial Intelligence into cloud platforms. Virtually every cloud provider is racing to offer AI infrastructure and services:

• AI as a Growth Engine: Analysts emphasize that AI is now a core driver of cloud growth. Synergy’s John Dinsdale remarked that “clearly AI is making a big difference” in cloud uptake, with generative AI services growing over 150% and adding significant incremental revenue srgresearch.com. Enterprise demand for AI training and inference has led to a boom in orders for cloud GPU capacity. For instance, newcomer CoreWeave secured a five-year deal with OpenAI worth $11.2B to provide AI infrastructure reuters.com, and is planning $20–23 billion in capital spending for 2025 to meet “booming demand from clients including Microsoft” reuters.com. Nvidia CEO Jensen Huang has dubbed this trend “the iPhone moment of AI”, where virtually every company will leverage cloud AI services – and indeed cloud vendors are positioning themselves as the AI compute backbone.
• Proliferation of AI Services: Cloud providers are rolling out AI-as-a-service offerings at all layers. This ranges from pre-trained large models (like OpenAI GPT-4 on Azure, Google’s PaLM on GCP, or Meta’s LLaMA on AWS), to AI development platforms (Azure ML, AWS SageMaker, Google Vertex AI), to turn-key AI applications (such as Salesforce’s Einstein GPT for CRM or Oracle’s new AI-powered Fusion apps). Microsoft’s Build announcements of agent orchestration tools and model catalogs on Azure exemplify how the cloud is increasingly an AI development environment blogs.microsoft.com blogs.microsoft.com. Even SaaS firms are becoming AI firms: 74% of enterprises have at least piloted generative AI initiatives according to Deloitte, and providers like ServiceNow and SAP are embedding AI “copilots” to automate workflows venturebeat.com ciodive.com.
• Multi-Cloud AI Strategies: Interestingly, some AI-centric companies are adopting multi-cloud approaches for resilience and scale. In June it was reported that OpenAI is now partnering with Google Cloud for additional capacity, even while Microsoft remains its primary cloud partner xyzreality.com. OpenAI is also leveraging Oracle Cloud and CoreWeave in addition to Azure xyzreality.com. This highlights that even cutting-edge AI startups recognize the need for multi-cloud deployments to avoid dependency and tap specialized strengths (Google for networking, Oracle for GPU clusters, etc.). Cloud providers, for their part, are eager to attract marquee AI workloads – hence deals like Microsoft-xAI Grok, and Google’s reported pursuit of OpenAI’s business. We can expect cloud competition to increasingly focus on who can provide the best AI infrastructure (e.g. fastest GPUs, specialized AI chips, global scale, and integrated data services).

Experts widely predict that AI will remain intertwined with cloud growth. Steve Hall of ISG projected a “gradual recovery” in IT services overall but noted “hundreds of billions being spent on infrastructure” for AI will drive widespread cloud adoption businesswire.com businesswire.com. Gartner’s forecast of $644B on generative AI by 2025 (with 80% on hardware) underscores that much of this investment flows through cloud data centers cdomagazine.tech venturebeat.com. In short, cloud and AI are now symbiotic – cloud provides the massive on-demand computing AI needs, and AI workloads are turbocharging cloud demand.

Sustainability and Green Cloud Initiatives

As cloud expansion accelerates, sustainability has become a paramount concern and competitive factor:

• Provider Sustainability Commitments: All major providers have aggressive climate goals. Microsoft aims to be carbon negative by 2030, and Google has pledged to run on 100% carbon-free energy by 2030 itconvergence.com. Amazon is targeting 100% renewable energy for AWS by 2025 and “water positive” (replenishing more water than it consumes) by 2030 businessinsider.com businessinsider.com. These goals align with analyst predictions: IDC estimates that by 2025 over 60% of enterprises will consider a cloud provider’s sustainability track record a key selection factor itconvergence.com. Gartner also predicts that by 2027, 70% of enterprises using generative AI will cite sustainability (and digital sovereignty) as top criteria when choosing cloud services itconvergence.com. We see this playing out in procurement – large customers are asking cloud vendors for transparency on carbon footprint and are favoring those with concrete renewable energy investments.
• Energy & Efficiency Innovations: Cloud operators are investing in green technologies: e.g., Google Cloud uses AI-driven cooling and has pioneered use of non-potable water for data center cooling in some sites businessinsider.com. Microsoft is experimenting with liquid immersion cooling and even underwater data centers (Project Natick). Amazon and others are building solar and wind farms to power data centers – Meta (Facebook) even signed a deal for a small nuclear reactor to power future cloud infrastructure clouddatacenter.events. Additionally, there’s a push for more energy-efficient chips (such as AWS’s Graviton ARM chips) which can do the same work with less power. The circular economy is also in focus: AWS has begun water recycling and heat reuse projects (capturing server heat to warm buildings).
• The Water Crisis for Data Centers: However, a stark reminder of the environmental challenges came from a June investigative report by Business Insider, which found “40% of [the USA’s] planned and existing data centers are in regions facing high or extremely high water stress.” xyzreality.com. The report highlighted that many hyperscale data centers – especially those supporting AI – consume millions of gallons of water per day for cooling, straining local water supplies abcnews.go.com abcnews.go.com. It called out that Microsoft has 52% of its U.S. data centers in high-stress water basins (e.g. Arizona), the highest proportion among peers businessinsider.com. Amazon has at least 81 large data centers in water-scarce regions as well businessinsider.com. With AI models driving higher density computing (and thus more heat), the water and power demands of cloud infrastructure are sharply increasing abcnews.go.com. Experts like Dr. Tevfik Kosar warn that such AI mega-centers “require hundreds of megawatts of power…and millions of gallons of water daily,” urging that new data centers “follow state-of-the-art sustainability practices” to mitigate impact abcnews.go.com abcnews.go.com. This has led companies to pledge mitigation steps: Google says it will replenish 120% of the water it consumes by 2030 businessinsider.com, and Microsoft is investing in RAIN projects (Reducing water in AI Networks). Nonetheless, sustainability is a growing point of scrutiny for the cloud industry – one that may influence where and how cloud facilities are built (for instance, favoring regions with abundant renewable energy and water).

In conclusion, sustainability is both a challenge and a differentiator for cloud providers. Those who can grow while reducing carbon and water footprint will have an edge with environmentally conscious customers and regulators. We can expect more public reporting of metrics like PUE (power usage effectiveness) and WUE (water usage) from cloud vendors, and possibly new fees or restrictions in places where data centers strain resources. The late-May BI report serves as a wake-up call that the cloud’s physical footprint has real-world environmental limits.

Edge Computing and Distributed Cloud

Another important trend is the rise of edge computing – processing data closer to where it’s generated, rather than in central cloud data centers – and the related concept of distributed cloud:

• Edge Adoption on the Rise: Gartner predicts that by 2025, 75% of enterprise data will be processed at the edge (outside centralized data centers or cloud), up from only 10% in 2018 otava.com. This dramatic shift is driven by the explosion of IoT devices, real-time analytics needs, and 5G networks. Indeed, the number of connected devices is projected to reach 75 billion by 2025 otava.com, and use cases like smart factories, autonomous vehicles, and AR/VR demand low-latency processing that edge computing can provide. During this period, telecom operators and cloud providers have been partnering to offer “cloud at the edge” services – for example, AWS has Wavelength zones (with carriers like Verizon) and Azure has Edge Zones. In May, we saw Kyndryl’s partnership with Microsoft specifically mentioning easier management of hybrid and edge environments for enterprise IT icloud.pe, which underscores enterprise interest in cohesive solutions spanning cloud-to-edge.
• Distributed Cloud Architectures: Major clouds are extending their infrastructure to the edge in various forms: AWS Outposts (on-prem racks that extend AWS services), Azure Stack/Hub, and Google Distributed Cloud appliances. Also, content delivery networks (Akamai, Cloudflare) are evolving into edge cloud networks, offering compute at edge locations. In June, Akamai’s CEO highlighted their network of 41 new micro data centers as part of a plan to grow cloud revenue ciodive.com. Similarly, Cloudflare and Fastly have expanded their serverless edge computing offerings, letting developers run code in dozens of cities globally for ultra-low latency. This indicates a future where cloud resources are not just in a few large regions, but highly distributed.
• Challenges and Security: Alongside growth, edge computing brings challenges such as management complexity and security. With potentially thousands of edge nodes, zero-trust security models are crucial. A May 2025 whitepaper by OTAVA noted that with the edge expanding, organizations must “shrink the attack surface” using zero-trust architectures and AI-driven threat detection at the edge otava.com otava.com. Indeed, securing data outside core data centers – often in retail stores, factories, or 5G base stations – requires new approaches. Vendors like Scale Computing (partnered with OTAVA) are delivering hyperconverged edge stacks with built-in resilience and security otava.com otava.com. Expect continued innovation around edge management platforms, possibly fueled by AI for monitoring and anomaly detection in distributed environments.

Experts maintain that cloud and edge are complementary: the cloud will handle heavy centralized processing and aggregation, while edge sites handle immediate local computation and filtering. The hybrid cloud of the future likely involves a mesh of core and edge nodes. For example, cloud provider OVH launched “MetaCloud” regions at telecom exchanges in Europe, and Verizon is working with AWS and Azure to host edges in metro areas. As 5G coverage grows (GSMA forecasts 2 billion 5G connections by end of 2025 otava.com), edge computing will accelerate, enabling new real-time applications. For enterprises, the trend means their IT architecture will span from sensors at the edge to big-data lakes in the cloud, with seamless integration needed. In May–June 2025, we saw the early stages of this with partnerships (like Kyndryl-MS) and products aimed at bridging hybrid, multi-cloud, and edge together icloud.pe.

Multi-Cloud and Hybrid Strategies

Finally, a crucial ongoing trend is the adoption of multi-cloud and hybrid cloud strategies, as organizations seek flexibility and avoid vendor lock-in:

• Multi-Cloud is the Norm: Surveys indicate the vast majority of enterprises are already multi-cloud. A recent Flexera report finds 89% of enterprises have a multi-cloud strategy (using at least two different cloud providers), and that is expected to reach near-universality by 2025 itconvergence.com. Companies deliberately distribute workloads: e.g., they might run ERP systems on one cloud, customer-facing apps on another, and use a third for specialized AI services. In May, BNP Paribas (a large European bank) expanded its use of IBM Cloud alongside other clouds, highlighting resilience as a motivation icloud.pe. Regulatory compliance also drives multi-cloud – in highly regulated sectors or Europe’s GDPR environment, businesses avoid putting all data in one foreign-owned cloud. The June 2 piece on European providers using the “sovereign cloud” angle suggests that even if an enterprise primarily uses a U.S. cloud, they might keep sensitive workloads on a local EU cloud to ensure jurisdictional control icloud.pe.
• Hybrid Cloud Continuum: Enterprises also continue to link on-premises environments with public clouds – the classic hybrid cloud. News from May shows vendors supporting this: Red Hat & AMD’s collaboration was about improving performance “across both on-premise and cloud systems” in a hybrid model icloud.pe. T-Mobile’s partnership with Red Hat (from earlier in 2025) aimed to deploy a cloud platform across its core network and far-edge – essentially a telco hybrid cloud icloud.pe. These examples illustrate that hybrid isn’t just legacy data centers plus one cloud; it can encompass telco edges, private clouds, and multiple public clouds – essentially a cloud everywhere paradigm.
• Tools for Multi-Cloud: Recognizing this trend, cloud providers and third parties are offering multi-cloud management and integration tools. Microsoft’s Defender security now covers AWS and Google Cloud cloudcomputing-news.net, and Google’s Anthos platform allows running Google Cloud services on AWS/Azure or on-prem. Startups and open-source projects (like HashiCorp’s Terraform, or Crossplane) that help orchestrate across clouds have gained popularity. In May, Kyndryl’s new services were explicitly about helping manage “juggling hybrid, multicloud, edge, and IoT” so that IT teams can handle the complexity icloud.pe. We also see containerization and Kubernetes as key enablers – many companies deploy containers that can be moved between clouds relatively easily.

Industry analysts view multi-cloud as a way to optimize costs and capabilities: pick the best cloud for each workload (one might have superior AI tools, another better analytics, etc.). It also provides leverage in negotiations and mitigates the impact of any single cloud outage. However, it brings challenges in skill requirements and governance. A Gartner or Omdia study would likely caution that multi-cloud requires consistent security policies and careful architecture to avoid excessive complexity or data egress costs. Nonetheless, the momentum is clear – as one commentator quipped, the future of enterprise IT is “multi-cloud by design, hybrid by necessity.” The May–June developments, from high-profile multi-cloud deployments (OpenAI, BNP Paribas) to vendor partnerships, reinforce that multi-cloud strategies are now a mainstream best practice rather than an exception.

Outlook: Experts and whitepapers generally foresee these trends intensifying through 2025 and beyond. Cloud growth is expected to remain strong, with market estimates for 2025 in the $600+ billion range globally. The competitive dynamics will likely produce more partnerships (as seen with IBM-Oracle, Microsoft-xAI) and possibly further consolidation or acquisitions, especially of specialized players (the Salesforce-Informatica deal being a prime example of AI-driven consolidation in SaaS ciodive.com). We can also anticipate continued geopolitical influences: U.S.–China tech tensions mean Chinese cloud providers will focus on APAC and emerging markets, while Western providers invest in localized zones to address data sovereignty.

In closing, the cloud computing landscape in May–June 2025 has been marked by remarkable growth and transformation. Major cloud vendors are scaling up infrastructure and innovating in AI services at breakneck speed, even as they face the responsibility of sustainability and the complexities of distributed architectures. As one analyst noted, “Cloud now dominates tech spending across infrastructure, platforms and applications… and remains incredibly well positioned to serve needs for innovation in AI/ML and edge computing.” techblog.comsoc.org With multi-cloud strategies, enterprises are in a stronger position to harness these innovations without vendor lock-in. The remainder of 2025 will likely see these themes develop further – more AI offerings, more emphasis on green cloud practices, and an increasingly interconnected cloud-edge continuum. The rapid announcements and expert analyses from these two months underline that cloud computing is not only a cornerstone of IT today, but is also continuously reinventing itself to meet the future.

Sources: The information above is drawn from financial reports, press releases, and expert commentary by reputable firms and journalists during May–June 2025. Key references include industry news outlets (CRN, CIO Dive, TechCrunch, VentureBeat, etc.), analyst reports (ISG, Synergy Research, IDC, Gartner), and statements from company executives. All specific facts and quotes have been cited to their original sources for verification. crn.com businesswire.com ciodive.com srgresearch.com icloud.pe itconvergence.com