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AI investments fuel shared cloud infrastructure spending, surging 43.9% YoY in Q1 2024 – IDC

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In the first quarter of 2024, global spending on compute and storage infrastructure for cloud deployments surged by 36.9% year over year to reach $33.0 billion, according to the latest report from the International Data Corporation (IDC). This growth significantly outpaced the 5.7% increase seen in non-cloud infrastructure spending, which totaled $13.9 billion during the same period.

The cloud infrastructure segment saw a slower growth in unit demand, up by 11.4%, primarily due to rising average selling prices (ASPs) driven by an increase in GPU server shipments.

“Cloud infrastructure spending growth continues being driven by the explosion of AI-related investments, which not only impact servers but also started to have positive influence on enterprise storage as well,” said Juan Pablo Seminara, research director for IDC’s Worldwide Enterprise Infrastructure Tracker. “Even though some caution still remains on the socio-political side, it has become clear that AI investment plans are not slowing down in 2024 and will continue growing at a high rate this year and beyond. Additionally, the improvement on economic prospects contributes to a very positive spending outlook for 2024 and 2025 where cloud-based spending will increase at double-digit pace.”

Shared and Dedicated Cloud Infrastructure Spending

Spending on shared (public) cloud infrastructure reached $26.3 billion in Q1 2024, marking a 43.9% increase from the previous year and accounting for 56.1% of total infrastructure spending. Meanwhile, dedicated (private) cloud infrastructure saw a more modest growth of 15.3%, reaching $6.7 billion.

IDC projects that total cloud infrastructure spending for 2024 will grow by 26.1%, totaling $138.3 billion. Shared cloud infrastructure spending is expected to rise by 30.4% to $108.3 billion, while dedicated cloud infrastructure is forecast to grow by 12.8%, reaching $30.0 billion.

With a forecasted 8.4% growth for non-cloud infrastructure in 2024, it is anticipated that, despite the majority of growth coming from cloud investments, non-cloud dedicated systems will see a recovery this year.

Service Providers Lead Infrastructure Spending

Service providers, including cloud, digital, and communications service providers, as well as hyperscalers and managed service providers, spent $32.2 billion on compute and storage infrastructure in Q1 2024, a 37.9% increase from the previous year. This group accounted for 68.7% of the total market. Non-service providers, such as enterprises and government entities, increased their spending by 5.8%, reaching $14.7 billion.

IDC anticipates that service providers’ spending on compute and storage infrastructure will grow by 26.2% in 2024, totaling $132.2 billion.

Regional Spending

Cloud infrastructure spending showed robust growth in most areas during Q1 2024. Latin America was the only region to see a decline, down by 2.8%. Western Europe and the Middle East & Africa experienced single-digit growth at 4.0% and 5.3%, respectively, due to political tensions delaying investment plans. Among the regions reporting double-digit growth, Asia/Pacific (excluding Japan and China) led with an 85.4% year-over-year increase, followed by Japan at 53.1%, Central & Eastern Europe at 42.6%, the USA at 37.0%, China (PRC) at 33.7%, and Canada at 16.1%. This growth was predominantly driven by substantial investments in high performance computing (HPC) and large AI projects, which had previously faced delays due to supply chain challenges.

Long Term Forecast

IDC cloud infrastructure spending

Looking ahead, IDC predicts that cloud infrastructure spending will achieve a compound annual growth rate (CAGR) of 14.3% from 2023 to 2028, reaching $213.7 billion by 2028 and comprising 75.0% of total compute and storage infrastructure spending. Shared cloud infrastructure will account for 77.5% of this total, growing at a CAGR of 14.8% to $165.6 billion. Dedicated cloud infrastructure spending is expected to grow at a CAGR of 12.6%, reaching $48.2 billion. Non-cloud infrastructure spending is projected to grow at a CAGR of 3.6%, reaching $71.4 billion by 2028.

Service providers’ spending on compute and storage infrastructure is forecast to grow at a 13.8% CAGR, reaching $199.9 billion by 2028.

Source: IDC

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