- Data center spending increased 34% year over year thanks to public cloud infrastructure
- Total market revenue expected to reach $282 billion
- Investments continue despite sustainability concerns
Total spending on data center hardware and software for 2024 has increased significantly compared to previous years, as demand for AI has reached a new peak, new figures show.
A new study from Synergy Research Group estimates that spending will increase 34% from 2023, largely driven by a 48% increase in spending on public cloud infrastructure – the sector accounts for more than half (55%) of the entire market.
More generally, the growing demand for public cloud services has been credited with driving investment in cloud infrastructure over the past 15 years, highlighting its significant impact on the sector.
Data center investments soar in 2024
The key to the 2024 boom, according to Synergy, has been Nvidia’s “explosive growth.” The chipmaker, now the second most valuable company in the world with a value of $3.431 billion, has seen its stock price rise 2.193% over the past five years.
The company wrote: “Nvidia’s direct sales to hyperscale and enterprise customers have propelled it into the ranks of leading data center vendors. »
If Synergy’s expectations for the fourth quarter prove true, based on actual data from the first three quarters of the year, total data center infrastructure equipment revenue will reach $282 billion.
“GPUs and generative AI systems have lit a fire in the market in 2024, driving record growth rates for the industry,” noted chief analyst John Dinsdale.
However, some analysts consider 2024 growth unsustainable. Separately, Canalys Senior Director Rachel Brindley added: “Substantial and continued spending will present new challenges, requiring cloud providers to carefully balance their investments in AI with the cost discipline needed to fund these initiatives.
Despite this warning, hyperscalers continue to invest heavily in artificial intelligence. Microsoft Vice Chairman and President Brad Smith recently said the company was preparing to invest $80 billion in AI data centers in its 2025 fiscal year.
Days later, United States President-elect Donald Trump announced $20 billion in funding from Emirati billionaire and DAMAC founder Hussain Sajwani to support data center infrastructure in Arizona , Illinois, Indiana, Louisiana, Michigan, Ohio, Oklahoma and Texas, hinting at billions more in funding. .
