Spending on compute and storage infrastructure for cloud deployments has surged to unprecedented heights, with 115.3% year-over-year increase in the third quarter of 2024. The spending reached a staggering $57.3 billion, highlighting the dominance of cloud infrastructure over non-cloud systems as enterprises accelerate their investments in AI and high-performance computing (HPC) projects, IDC said in a report.
Cloud infrastructure’s remarkable growth contrasts with a 28.6% year-over-year increase in non-cloud infrastructure spending, which reached $19.6 billion in the same quarter. According to IDC, the cloud segment benefited from growing adoption of advanced AI-enabled accelerated servers despite challenges like soaring average selling prices (ASPs).
“The cloud infrastructure segment experienced a lower growth in unit demand of 15.6%, due to a continued increase in ASPs mostly related to the exponential increase of GPU server shipments,” the report added.
Shared cloud led the way
Shared cloud infrastructure, representing the bulk of the market, grew 136.5% year-over-year to $47.9 billion in Q3 2024, accounting for a commanding 62.4% share of the total infrastructure spending. Dedicated cloud infrastructure also posted a strong performance, growing by 47.6% to $9.3 billion.
“Cloud infrastructure spending growth continues to be driven by investments in accelerated servers for AI initiatives and large HPC projects,” Juan Pablo Seminara, Director for Worldwide Enterprise Infrastructure Trackers at IDC said in the report. “After a year where the demand was focus on serve infrastructure build-up for AI model development and training, we will start to see more investments oriented to AI model inferencing that will shift demand towards less dense GPU based platforms, that of course will continue be demanded throughout 2025 and beyond but with a less aggressive pace than last year.”
Seminara noted that while 2024 focused heavily on infrastructure for AI model development, subsequent years will emphasize scaling AI inference capabilities using less dense platforms.
Year-end and future projections
For 2024, IDC projects a 74.3% year-over-year growth in cloud infrastructure spending, reaching $192 billion. Non-cloud infrastructure is expected to see a more modest increase of 17.9%, totaling $71.4 billion.
Shared cloud is set to drive much of this growth, with a forecasted 88.9% year-over-year increase to $157.8 billion. Dedicated cloud infrastructure spending is expected to grow 28.6%, reaching $34.2 billion, according to the report.
Globally, service providers are expected to account for the lion’s share of compute and storage investments in 2024, spending $183.1 billion — a 73.5% increase. Meanwhile, spending by enterprises and government entities is also poised for significant growth, reflecting a continued expansion of digital infrastructure and capabilities.
IDC defines its service provider category to encompass cloud providers, digital service platforms, communication service firms, hyperscalers, and managed service operators.
Regional and long-term insights
From a geographic perspective the report stated that the United States led cloud spending growth in Q3 2024 with a triple-digit surge of 148.3%, followed by China at 100%. Regions such as Asia Pacific (excluding Japan and China), Japan, and Western Europe reported robust double-digit growth, while Central and Eastern Europe was the only region to decline at -1.7%.
For the long-term, IDC has predicted a compound annual growth rate (CAGR) of 24.2% in cloud infrastructure spending through 2028, reaching $325.5 billion. Shared cloud infrastructure will account for 79.1% of this spend, further cementing its dominance in the market.
AI’s impact on enterprise IT strategies
Enterprises worldwide are leveraging this AI-fueled momentum to transform operations. With AI now integral to competitive differentiation, businesses are scaling GPU-accelerated workloads to handle both training and inferencing of advanced AI models.
However, with the exponential growth come challenges, including elevated costs and resource demands. As spending trends underscore the cloud’s dominant position in enterprise IT strategies, leaders must stay agile to navigate the competitive landscape.
With AI redefining infrastructure priorities, businesses that adapt their cloud strategies to balance performance with cost efficiency will position themselves for long-term success.
Source:: Network World