In 2024, demand for generative artificial intelligence services drove datacentre hardware and software spending to an all-time high. Synergy Research Group reported a 34% increase in spending year-on-year, with hyperscale providers and private companies racing to set up AI-ready server farms.
John Dinsdale, the chief analyst at Synergy, pointed out that this surge in demand has ignited investments in graphics processing units (GPUs). He noted that the market was already doing well, but the newfound interest in AI really pushed it forward.
The datacentre hardware and software market hit over $280 billion in sales, a figure Dinsdale called unprecedented. He remarked that while public cloud success has long driven datacentre investments, reaching this level in 2024 came as a surprise to many.
The data reflects actual sales from the first three quarters of 2024, along with Synergy’s predictions for the fourth quarter. In this time, sales to public cloud providers surged by 50%, and enterprise spending rose by 21%. Dinsdale noted that enterprise growth had been weak in recent years, while cloud providers have consistently driven datacentre market growth. His five-year forecast suggests this will continue.
Public cloud providers now make up over half of the datacentre hardware and software spending—55%, up from just 20% a decade ago. Dinsdale anticipates that this number could reach nearly 65% in the next five years.
Servers, storage, and networking equipment account for about 85% of spending in this sector, while the remaining 15% comes from cloud management, security, and virtualization software.
One noteworthy trend is the rising prominence of Nvidia in the datacentre hardware space. The company’s GPU technology is in high demand from both hyperscalers and large enterprises. According to Synergy, Dell leads in the server and storage market, while Inspur dominates server sales to public cloud providers. Cisco tops the networking sector, with Microsoft also ranking well due to its strong position in server operating systems and virtualization tools. Nvidia has become a significant supplier, serving both system vendors and service providers directly.