Friday, April 25, 2025

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Questions raised on costs by GenAI’s massive hyperscaler spending

Gartner’s latest forecast predicts a 7.5% increase in worldwide IT spending compared to 2023, totaling $5.26tn in 2024. The surge is driven by a 24% boost in datacentre investments to support generative AI (GenAI) demand.

John-David Lovelock, vice-president analyst at Gartner, noted the significant rise in datacentre spending to meet GenAI compute power requirements. He highlighted that hyperscalers are projected to invest up to $500bn in AI servers by 2028.

Despite the demand for AI technology, IT services spending growth is expected to slow to 7.1% in 2024. This is attributed to a decrease in spending on consulting and business process services. Lovelock anticipates a rush towards the end of the year to compensate for the slower start.

Overall, the forecast highlights the growing impact of GenAI on IT investments and the challenges faced by CIOs in managing increasing costs.