Cloud infrastructure spending grew a whopping 29% in Q1 2021, buoyed by the impact the pandemic has had on businesses.

As the COVID-19 pandemic swept the globe, organizations of all sizes accelerated their transition to cloud computing in an effort to stay productive. Especially as employees were sent home to work remotely, cloud computing became one of the single most critical factors in many businesses’ success.

The accelerated digital transformation continues to impact the cloud market, according to data from Canalys. In fact, spending increased some 29%, hitting $18.6 billion.

Cloud infrastructure services spend in the United States grew 29% in Q1 2021 to a record US$18.6 billion. Total expenditure increased US$4.2 billion in the last year and US$621 million in the last quarter according to the latest Canalys data. Dollar for dollar, annual expansion was the highest in two years, indicating robust demand for cloud services. The focus on digital transformation during the COVID-19 pandemic was the main factor behind the continued investment momentum, aided by the economic recovery and subsequent restart of some delayed projects.

As the US rolls out the Biden administration’s modernization initiatives, Canalys sees cloud providers benefiting even more, especially with the addition of $1 billion added to the Technology Modernization Fund, part of the larger America Rescue Plan. AWS, Microsoft Azure and Google Cloud — with 37%, 23% and 9% of the US market respectively — are rapidly building out their infrastructure to keep up.

“Cloud service providers have a big opportunity with the US government, not only with its stated desire to modernize technologies, but also its renewed focus on cybersecurity efforts,” said Canalys Vice President Alex Smith. “The recent SolarWinds hack affected nine federal agencies and the Colonial Pipeline hack exposed the high risk all organizations face. With intense competition over large government cloud contracts, such as the US$10 billion JEDI contract, a security advantage will pay off for bidding cloud service providers.”