New stats from IDC reveal that the relentless demand for artificial intelligence (AI) is propelling first-quarter surges in cloud infrastructure spending. The growth trend shows no signs of slowing down.
Those seemingly endless investments in AI continue to translate into skyrocketing cloud infrastructure demand.
Research firm IDC has released new figures showing a 37% increase in spending on public and private cloud computing and storage, totaling $33 billion for the first quarter of 2024 alone. Public cloud spending accounted for over half (56%) of this infrastructure outlay, IDC reported.
The main driver? AI and its associated deployments. These purchases “not only impact servers but also started to have a positive influence on enterprise storage as well,” said Juan Pablo Seminara, research director for IDC’s Worldwide Enterprise Infrastructure Tracker, which features the firm’s latest numbers.
“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,” Seminara added.
To be sure, the hyperscalers are not alone in rolling out all manner of AI-centric capabilities. Smaller providers, as well as system integrators, managed service providers, consultancies, and other channel partners, are also helping end users to leverage AI, particularly generative AI. Of course, the most effective and affordable AI tools require cloud computing as their foundation. This reality, coupled with hopes for an improved global economy, has led IDC to predict “a very positive” outlook for this year and next, with cloud spending expected to grow at a double-digit pace, according to Seminara.
In the first quarter alone, IDC noted that service providers — which, in the firm’s definition, include many channel partners — spent $32 billion on cloud infrastructure. This marked a nearly 38% increase from 2023 and accounted for almost 69% of the total market. For the full year 2024, IDC expects service providers to invest $132 billion in cloud computing and storage, a 26% increase over 2023.
Meanwhile, non-service providers such as enterprises and government agencies ramped up their cloud infrastructure spending to approximately $15 billion in the first quarter. This surge is unsurprising given how rapidly these buyers are acquiring AI resources to gain more insights into their operations, identify inefficiencies, and foster innovation.
Indeed, for 2024, IDC forecasts cloud infrastructure spending will grow 26% compared to 2023, reaching $138 billion. In contrast, spending on non-cloud infrastructure will rise only 8% to about $65 billion. Public cloud infrastructure alone is expected to experience a 30% year-over-year increase to $108 billion for the full year. Private cloud infrastructure will see a bit less demand, growing almost 13% to a total of $30 billion for the year, according to IDC.
Geographically, every region except Latin America increased cloud infrastructure spending in the first quarter, IDC reported. However, due to political tensions, buyers in Western Europe and the Middle East, and Africa slowed their investments, resulting in only single-digit growth. Double-digit growth was observed in Asia Pacific, Japan, and China (neither of which IDC considers part of Asia Pacific), Central and Eastern Europe, the United States, and Canada. Much of the demand stemmed from the need for high-performance computing and AI-based projects, some of which had been delayed due to pandemic-era supply issues, per IDC.
Overall, IDC is projecting a 14% compound annual growth rate for cloud infrastructure from 2023 to 2028. The firm expects spending to reach nearly $214 billion in 2028, accounting for three-quarters of total compute and storage infrastructure spending. Public cloud will make up the bulk of these figures, reaching a little more than $165 billion, while private cloud will capture about $48 billion. Service provider spending, which includes consumption from the channel, is expected to approach $200 billion by 2028.
As AI continues to drive cloud infrastructure demand, organizations must prioritize robust infrastructure strategies to support their AI initiatives and stay ahead in the competitive landscape.
Start Growing with Cloudways Today.
Our Clients Love us because we never compromise on these
Abdul Rehman
Abdul is a tech-savvy, coffee-fueled, and creatively driven marketer who loves keeping up with the latest software updates and tech gadgets. He's also a skilled technical writer who can explain complex concepts simply for a broad audience. Abdul enjoys sharing his knowledge of the Cloud industry through user manuals, documentation, and blog posts.
