An upsurge in cloud data center construction is helping drive global IT spending to $5.26 trillion in 2024, representing a 7.5% increase from the previous year, according to research published on Tuesday by Gartner.
The risk of not participating in the race for AI optimization is driving investments from tech giants in servers, semiconductors, and other hardware to support generative artificial intelligence projects, stated John-David Lovelock, distinguished vice president and analyst at Gartner. While data center systems represent only a fraction of total IT spending, Gartner forecasts a 24% year-over-year growth in this category.
AI consumption will also significantly contribute to the growth of the software market, elevating spending to $1.1 trillion this year, up from $974 billion in 2023, according to the firm’s forecast. However, software providers will only see a fraction of the revenue derived from generative AI add-ons, as much of these returns will go to AI model providers, Lovelock noted.
The surge in large-scale language models last year is driving an increase in spending across various technology categories, from cloud infrastructure and enterprise software to IT consulting and business process services.
Tech giants have embarked on a spending spree on infrastructure during the first half of the year, with Google Compute, AWS, and Microsoft committing tens of billions of dollars to data center upgrades and constructions. Companies seeking colocation space may not be so fortunate, as vacancy rates are hitting new lows.
“The computational power needs of generative artificial intelligence are being felt across the data center, and spending in that segment reflects this voracious demand,” commented Lovelock.
Gartner observed a slight slowdown in IT services spending experienced by major tech consulting firms like Accenture during the first half of the year. Spending growth in this category is expected to be 7.1% year-over-year in 2024, a modest reduction from the nearly 10% increase Gartner forecasted in April.
However, budgetary caution has given way to a renewed corporate appetite for modernization.
“The change fatigue among CIOs that we saw earlier this year has eased, and contract backlogs dating back to the third quarter of 2023 are clearing,” Lovelock stated. “We expect to see a greater rush towards the end of the year to make up for the slow start.”
This growing interest in modernization and infrastructure expansion reflects the critical importance that companies are placing on technology and artificial intelligence to stay competitive in an increasingly digitized global market.
via: CIOdive