- Data center usage is up 34% year-over-year thanks to public cloud infrastructure
- Total market revenue is expected to reach $282 billion
- Investments continue despite concerns about sustainability
Total data center hardware and software spending for 2024 grew hugely compared to previous years as demand for artificial intelligence hit a new high, new figures claim.
New research from Synergy Research Group estimates that spending will grow by 34% compared to 2023, largely thanks to a 48% increase in spending on public cloud infrastructure – the sector accounts for more than half (55%) of the entire market.
More broadly, the growing demand for public cloud services has been credited with driving investment in cloud infrastructure for 15 years, underscoring its significant impact on the industry.
Data center investments skyrocket 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 stock prices rise 2.193% over the past five years.
The company wrote: “Nvidia’s sales directly to hyperscale and enterprise customers catapulted it into the ranks of leading data center vendors.”
If Synergy’s fourth-quarter expectations are met, total revenue from data center infrastructure equipment will reach $282 billion based on actual data from the first three quarters of the year.
“GPUs and generative AI systems lit a fire under the market in 2024, resulting in record growth rates for the industry,” noted chief analyst John Dinsdale.
However, some analysts call the growth in 2024 unsustainable. Separately, Canalys senior director Rachel Brindley added: “Continued significant spending will present new challenges that require cloud vendors to carefully balance their investments in artificial intelligence with the cost discipline needed to fund these initiatives.”
Despite the 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 throughout fiscal year 2025.
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 across Arizona, Illinois, Indiana, Louisiana, Michigan, Ohio, Oklahoma and Texas, hinting several billions in financing.
