Key Takeaways
- Research and advisory firm Gartner projects that worldwide IT spending will grow to $5.26 trillion in 2024, a 7.5% jump from the year prior, fueled by artificial intelligence.
- Data-center spending is the segment expected to experience the most growth, rising 24% this year, Gartner said, citing Big Tech companies’ substantial AI investments.
- AI-related spending is significant in software as well, with Gartner noting that the expenditures act as a “tax” for that product line, rather than an investment.
Several IT companies have increased their capital expenditures to invest in artificial intelligence (AI), sending the sector’s global spending higher amid the AI boom.
Research and advisory firm Gartner forecasts global IT spending to grow to $5.26 trillion in 2024, a 7.5% increase from 2023, with the surge driven by AI, according to a report released Tuesday.
Spending in data-center segments is to grow the most significantly, Gartner said, as Big Tech companies such as Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), and Amazon (AMZN), increase spending to invest in AI infrastructure required to train and run AI technology.
Gartner’s research said that while data-center spending is to part of a company’s AI investment, some software spending can be viewed as a “tax” because part of the revenue gained from generative AI features goes back to AI model provider partners.
Data-Center Spending To Rise Most in 2024
Spending on data-center systems is expected to lead the IT segments. Gartner forecasts data-center spending to increase to $293.09 billion in 2024—a 24.1% jump from the year prior.
The analysts said this rise in spending growth is “due in large part to increased planning for GenAI.”
“The compute power needs of GenAI are being felt across the data center, and spending in that segment reflects this ravenous demand,” Gartner VP Analyst John-David Lovelock said.
Meanwhile, an equities strategist for investment bank William Blair said that significant spending in AI infrastructure, like data centers and electrical equipment, has supported the “ongoing economic expansion.”
GenAI Affecting Software Like a ‘Tax’
Software spending expansion is expected be the second largest after the data-center segment, but the Gartner analysts said this spending is in some ways more like a tax, rather than an investment.
The effects of GenAI are “being felt across all technology segments and subsegments, but not to everyone’s benefit,” Lovelock said.
The analysts added, “Some software spending increases are attributable to GenAI, but to a software company, GenAI most closely resembles a tax” when “revenue gains from the sale of GenAI add-ons or tokens flow back to their AI model provider partner.”
Gartner projects that 2024 software IT spending will be nearly $1.1 trillion, up 12.6% from 2023.