- Data center spend is up 34% year-over-year thanks to public cloud infrastructure
- Total market revenue is expected to reach $282 billion
- Investments continue despite sustainability concerns
Total data center hardware and software spend for 2024 grew hugely on previous years as the demand for AI hit a new high, new figures have claimed.
New research from Synergy Research Group estimates spend will grow 34% compared with 2023, thanks largely to a 48% rise in public cloud infrastructure spend – the sector accounts for more than half (55%) of the entire market.
More broadly, increasing demand for public cloud services has been credited with driving cloud infrastructure investments for 15 years, highlighting its significant impact on the industry.
Data center investments skyrocketed in 2024
Key to the 2024 boom, says Synergy, 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 share prices rise 2,193% over the past five years.
The company wrote: “Nvidia’s sales directly to hyperscale and enterprise clients catapulted it into the ranks of leading data center vendors.”
If Synergy’s fourth-quarter expectations ring true, based on real data from the first three quarters of the year, total data center infrastructure equipment revenues will reach $282 billion.
“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 are calling 2024’s growth unsustainable. Separately, Canalys Senior Director Rachel Brindley added: “Continued substantial expenditure will present new challenges, requiring cloud vendors to carefully balance their investments in AI with the cost discipline needed to fund these initiatives.”
Despite the warning, hyperscalers are continuing ti invest heavily in artificial intelligence. Microsoft Vice Chair 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 across Arizona, Illinois, Indiana, Louisiana, Michigan, Ohio, Oklahoma and Texas, alluding to billions more in funding.