AI infrastructure spending to cross US$100b mark by 2028

Global spending on artificial intelligence (AI) infrastructure will surpass the US$100 billion mark by 2028, according to IDC.

The predicted rapid growth is primarily fueled by the increasing adoption of AI technologies across various sectors. Enterprises are recognising the transformative potential of AI and are investing heavily in the necessary hardware to support these advanced systems.

In H1 of 2024, spending on compute and storage hardware infrastructure for AI deployments jumped 37 percent year-over-year increase to reach US$31.8 billion.

Much of this growth is attributed to the server market, which accounts for 89 percent of the total AI infrastructure spending. The preference for servers with embedded accelerators is particularly noteworthy, as they make up 58 percent of the total server AI infrastructure spending. These accelerated servers are projected to exceed 60 percent of server AI infrastructure spending by 2028, growing at an impressive 19 percent five-year compound annual growth rate (CAGR).

The cloud and shared environments are playing a crucial role in driving this expansion. Hyperscalers, cloud service providers and digital service providers are aggressively expanding their infrastructure capabilities, with 65 percent of the total server spending in AI deployed in these environments. On the other hand, traditional enterprises have been slower to adopt on-premises AI infrastructure, indicating a potential future growth opportunity.

Storage spending in AI infrastructure is another significant contributor to this trend. The need to manage large datasets for training AI models and store vast amounts of data for inference phases has led to a 36 percent year-over-year growth rate in storage spending during the first half of 2024.

Unsuprisingly, the United States is leading the global AI infrastructure market, accounting for almost half of the total spending in H1 of 2024. However, the Asia Pacific and Japan (APJ) region is expected to grow at the fastest CAGR of 20 percent over the next five years, signalling a shifting landscape in AI infrastructure investment.

“IDC expects AI adoption to continue growing at a remarkable pace as hyperscalers, CSPs, private companies, and governments around the world are increasingly prioritising AI. Growing concerns around energy consumption for AI infrastructure will become a factor in data centers looking for alternatives to optimise their architectures and minimise energy use” said Lidice Fernandez , Group Vice President of Worldwide Enterprise Infrastructure Trackers at IDC.