Gartner: AI spurs 25% surge in data center systems spending

Generative AI is driving significant IT spending growth, according to Gartner’s most recent global forecast, with data center infrastructure seeing the biggest spike. The research firm is forecasting 25.3% growth in data center systems, largely due to AI services and GPU-based specialized services for AI workloads.

The forecast exceeds Gartner’s predictions from earlier this year “primarily due to the explosive growth in AI server demand,” according to John-David Lovelock, distinguished vice president analyst at Gartner, who shared details of the IT spending projections during a Gartner webinar on the research. Total server spend is now projected to double from $70 billion in 2022 to $140 billion by 2025 and then triple to $200 billion by 2028, Lovelock explained.

Service providers are projected to spend nearly $100 billion on AI-specific servers this year, and the supply of GPUs appears to be the main limiting factor in this market, with demand expected to outstrip supply for several years to come, he said. Lovelock emphasized that this surge in AI server spending is creating a substantial foundation for generative AI capacity, which will have flow-through effects across other IT categories.

“The amount of capacity that is being put in place to both build and create AI models, whether they’re sold externally to clients or used internally for development, is resulting in a fantastic foundation being built for capacity to do genAI. The spending of it flows across to all the rest of our categories,” Lovelock said. “This growth in AI server spending is happening much faster than previous technology cycles.”

In the big picture, worldwide IT spending is expected to total $5.26 trillion in 2024, an increase of 7.5% from 2023, according to Gartner.

Among the other areas that Gartner says will experience spending boosts are:

• Cloud services: Infrastructure as a service (IaaS) is expected to see 22.4% growth, boosted by GPU-as-a-service and AI infrastructure offerings.
• Software: GenAI capabilities being integrated into existing applications will spur 12.6% growth in spending on software.
• IT services: With increased demand for AI implementation and consulting services, the services segment will see 7.1% growth.
• Devices: This category will experience 11.7% growth, partly driven by AI-ready smartphones and PCs.
• Productivity tools: The cloud email and authoring market is seeing 28.2% growth, largely attributed to AI features like Microsoft’s Copilot.

Enterprise companies are investing in genAI projects, tools, and customization of existing products, according to Gartner. And the rapid adoption and integration of genAI technologies across various industries is fueling the need for more powerful data center infrastructure. The unexpected surge in AI-related hardware spending has significantly boosted the overall data center systems forecast beyond initial projections, Lovelock explained.

“The compute power needs of GenAI are being felt across the data center, and spending in that segment reflects this ravenous demand,” Lovelock said in a statement.