Data Center Spending to Surge as Firms Gear Up for GenAI Integration

  • Home
  • Industry News
  • Data Center Spending to Surge as Firms Gear Up for GenAI Integration
DateApr 30, 2024

Data center system investments are expected to rise sharply as multinational corporations prepare to integrate generative AI (GenAI) technology. Industry analysts from Gartner predict that spending on these systems will increase dramatically from 4% in 2023 to 10% in 2024, indicating a significant reallocation of resources towards more sophisticated AI capabilities.

The changing landscape was described by John-David Lovelock, Distinguished VP Analyst at Gartner. By 2023, businesses were mostly telling stories about GenAI’s promise. The shift to strategic planning is now taking place in 2024, he said, with 2025 serving as the main execution year. “Technology providers need to remain a step ahead in this cycle, focusing not only on integrating GenAI into existing products and services but also exploring new use cases identified by their enterprise clients.”

A significant trend identified by Gartner is the substantial investment by service providers in critical markets that support large-scale GenAI projects, such as servers and semiconductors. Mr. Lovelock highlighted, “There is a gold rush level of spending among service providers. In 2024, it’s projected that AI servers will constitute nearly 60% of total server spending by hyperscalers.”

Global IT Spending Set to Rise 8% in 2024

Data center spending is set to jump from 4% in 2023 to 10% in 2024 as firms prepare for GenAI integration, says Gartner’s John-David Lovelock.This surge in spending is part of a broader increase in worldwide IT expenditures, which Gartner forecasts will reach $5.06 trillion in 2024 – an 8% increase from the previous year. This figure exceeds earlier projections of 6.8% growth, setting the pace for IT spending to surpass $8 trillion well before the decade’s end.

IT services spending is expected to increase by 9.7% and surpass $1.52 trillion, making it the largest market that Gartner monitors. “This category is set to become the largest market segment Gartner tracks,” Mr. Lovelock stated. The rapid expansion is partly due to enterprises struggling to attract talent with essential IT skills, which intensifies the need for consulting services over in-house staffing. “2024 marks an inflection point where more funds are being channeled into consulting services rather than internal staffing for the first time,” Lovelock added.

Gartner’s IT spending forecast methodology includes a comprehensive analysis based on sales data from over a thousand vendors across a wide range of IT products and services. The firm employs a blend of primary research techniques and secondary sources to construct a detailed market size database, which forms the basis of its forecasting.

The quarterly IT spending forecasts provided by Gartner would offer invaluable insights into IT spending trends across various segments, including hardware, software, IT services, and telecommunications. These reports can be crucial for helping clients of Gartner navigate market opportunities and challenges, especially as industries continue to adapt and align with rapid technological advancements.

Leave a Reply