- Data center spending increases 34% year over year thanks to public cloud infrastructure
- Total market revenue is expected to reach $282 billion.
- Investments continue despite sustainability concerns
Total spending on data center hardware and software by 2024 grew massively from previous years as demand for AI reached a new high, new figures claim.
New research from Synergy Research Group estimates spending will grow 34% compared to 2023, thanks in large part to a 48% increase in spending on public cloud infrastructure – the sector accounts for more than half (55%) of the entire market.
More broadly, growing demand for public cloud services is credited with driving cloud infrastructure investments for 15 years, highlighting its significant impact on the industry.
Data center investments soar in 2024
The key to the 2024 boom, Synergy says, was Nvidia’s “explosive growth.” The chipmaker, now the second most valuable company in the world with a value of $3.431 trillion, has seen its share prices rise 2,193% over the past five years.
The company wrote: “Nvidia’s sales directly to enterprise and hyperscale customers catapulted it into the ranks of leading data center vendors.”
If Synergy’s expectations for the fourth quarter are 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 lit a fire in the market in 2024, resulting in record growth rates for the industry,” said chief analyst John Dinsdale.
However, some analysts consider 2024 growth to be unsustainable. Separately, Canalys Senior Director Rachel Brindley added: “Substantial ongoing expenses will present new challenges, requiring cloud providers to carefully balance their investments in AI with the cost discipline necessary to fund these initiatives.” .
Despite the warning, hyperscalers continue to invest heavily in artificial intelligence. Microsoft Vice President and President Brad Smith recently said the company was preparing to invest $80 billion in AI data centers throughout its 2025 fiscal year.
Days later, US 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, alluding to billions more in funding. .
