AI keeps cloud infrastructure spending on the rise

Spending on computing and storage infrastructure products for cloud deployments, including shared (public) and dedicated (private) environments, increased 36.9% year over year in the first quarterof 2024 to $33.0 billion worldwide, according to IDC. Cloud spending continues to outgrow the non-cloud (i.e. on-premises) segment with the latter growing by 5.7% in Q1 to $13.9 billion.

► Q1 growth was fuelled by AI-related spending

► Investment shift from on-premises to cloud continues

IDC said that a lot of the spending growth was being driven by the explosion of AI-related investments boosting sales of both servers and storage products. It expects that influence to continue for the rest of the year and with an improved economic outlook too, the prospects for 2024 and 2025 look decent, with double-digit growth expected.

AI keeps cloud infrastructure spending on the rise

Spending on public cloud infrastructure reached $26.3 billion in the quarter, up 43.9% on the previous year and this continues to be the biggest category, accounting for 56.1% of all infrastructure spending. The dedicated (private) cloud infrastructure segment saw lower growth of 15.3% year over year to $6.7 billion.

For the full year (2024), IDC is forecasting that overall cloud infrastructure spending will grow 26.1% to $138.3 billion. Public cloud sales will grow at 30.4%, private cloud growth will be 12.8%. And while spending on ‘non-cloud’ infrastructure is forecast to grow just 8.4% in comparison, this is higher than the Q1 figure, which means that on-premises spending will recover a little during the year.

Even so, cloud will continue to dominate and long term, IDC predicts spending on cloud infrastructure will have a compound annual growth rate (CAGR) of 14.3% over 2023-2028, reaching $213.7 billion in 2028 and accounting for 75.0% of total compute and storage infrastructure spend.

Shared cloud infrastructure spending will account for 77.5% of the total cloud spending in 2028, growing at a 14.8% CAGR and reaching $165.6 billion. Spending on dedicated cloud infrastructure will grow at a CAGR of 12.6% to $48.2 billion. Spending on non-cloud infrastructure will also rebound with a 3.6% CAGR, reaching $71.4 billion in 2028. Spending by service providers on compute and storage infrastructure is expected to grow at a 13.8% CAGR, reaching $199.9 billion in 2028.

AI keeps cloud infrastructure spending on the rise