Gartner revises server spending forecast

Source: SiliconANGLE

Gartner Inc.’s latest worldwide information technology spending forecast predicts a 24.1% jump in spending on data center systems, more than double the 10% growth expected just three months ago and six times the actual growth of 4% last year — thanks to generative artificial intelligence.

Two factors are behind the sudden jump, he said. Nvidia Corp., which dominates the market for the graphic processing units that power AI servers, has solved most of its supply chain problems. “The world now has the ability to make more AI-optimized servers,” said John-David Lovelock, a distinguished vice president analyst at Gartner. “But we still see backlogs on orders for these new generative AI-type servers in the six months to one-year range.”

Gartner estimates that large hyperscalers will spend $70 billion on cloud infrastructure this year, growing to $140 billion in 2025 and $210 billion in 2028. “We still don’t have an end state for these tools,” he said. “We’re not anywhere near commodity status for a set of LLMs or even the basic agreed-on functionality that an LLM should have.”

Though enterprise spending isn’t a major factor in server spending growth, corporate data centers aren’t entirely out of the picture. “Cloud providers are in the 40% to 60% growth range for servers while businesses are in the 20% range,” Lovelock said. “Most CIOs are still at the starting line asking what they can do with these tools.”

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