Dive Insight:
- Global spending on data center hardware and software hit an all-time high last year, growing 34% year over year to $282 billion, Synergy Research Group said in a Tuesday report.
- Hyperscalers accounted for more than half of all infrastructure investments, but CIOs and their surrogates helped drive the surge. Enterprise spending on data center gear increased 21% after five years of marginal growth, thanks largely to generative AI, according to SRG.
- “GPUs and generative AI systems lit a fire under the market, resulting in record growth rates for the industry,” SRG Chief Analyst John Dinsdale said. “While the ongoing success of public cloud has been the main driving force behind data center investments for well over a decade now, no-one imagined a 2024 market for data center gear reaching over $280 billion.”
Dive Insight:
Enterprises leaned hard on cloud to pilot generative AI use cases and jumpstart adoption. But IT chiefs shored up internal systems, too, as large language model technologies spread to hybrid ecosystems and cost concerns rose.
Despite an enterprise spending spike, SRG expects big cloud providers to maintain and expand their dominance in data center capacity.
“It is good to see the enterprise side of the market growing again, though the long-term trend remains,” Dinsdale said in the report. Cloud providers accounted for one-fifth of global spend on data center hardware and software a decade ago. By 2030, SRG expects hyperscalers to consume nearly two-thirds of the market.
Last year, the amount of compute capacity in the hands of hyperscalers eclipsed what was left on-prem. Big cloud will control an estimated 60% of global compute before the end of the decade, according to SRG’s analysis. The remaining 40% will be split evenly between on-prem and colocation data centers.
The trend toward cloud is reflected in SRG’s latest round of projections.
Hyperscale data center capacity will triple by 2030, according to a separate SRG report published Thursday. The average capacity of new cloud data centers is expected to double in the next four years as compute density increases.
“That installed base will continue to grow, but the most marked change in the market is the ever-increasing capacity of data centers that are being brought online,” Dinsdale said.
In late 2024, global cloud and internet service providers had 1,103 data centers operational and nearly 500 additional facilities in the pipeline, by SRG’s count.
The industry’s biggest players kicked off 2025 with major infrastructure investments.
Since the start of January, AWS announced plans to invest $11 billion in Georgia-based data centers and Microsoft said it will spend $80 billion on AI infrastructure during its current fiscal year.
