Shared Cloud Infrastructure Spending Continues Leading Growth Path

According to IDC, spending on computing and storage infrastructure products for cloud deployments, including dedicated and shared IT environments, increased 115.3% in the third quarter of 2024 to $57.3 billion. Spending on cloud infrastructure continues to outgrow the non-cloud segment with the latter growing by 28.6% in 3Q24 to $19.6 billion. The cloud infrastructure segment experienced a lower growth in unit demand of 15.6%, due to a continued increase in ASPs mostly related to the exponential increase of GPU server shipments.

"Cloud infrastructure spending growth continues being driven by accelerated servers-related investments that not only aim to cover AI initiatives but also support large HPC projects that were unveiled recently,” said Juan Pablo Seminara, Director for IDC's Worldwide Enterprise Infrastructure Trackers. “After a year where the demand was focused on serve infrastructure build-up for AI model development and training, we will start to see more investments oriented to AI model inferencing that will shift demand towards less dense GPU-based platforms, that, of course, will continue to be demanded throughout 2025 and beyond but with a less aggressive pace than last year.”

Spending on shared cloud infrastructure reached $47.9 billion in the quarter, increasing 136.5% compared to a year ago. The shared cloud infrastructure category continues to capture the largest share of spending compared to dedicated deployments and non-cloud spending, in 3Q24 shared cloud accounted for 62.4% of the total infrastructure spending. The dedicated cloud infrastructure segment presented lower growth of 47.6% year-over-year in 3Q24 to $9.3 billion.

For 2024, IDC is forecasting cloud infrastructure spending to grow by 74.3% compared to 2023, which is $192.0 billion. Non-cloud infrastructure is expected to grow 17.9% to $71.4 billion. Shared cloud infrastructure is expected to grow 88.9% year over year to $157.8 billion for the full year, spending on dedicated cloud infrastructure is also expected to have a double-digit growth in 2024 with 28.6% to $34.2 billion for the full year. The subdued growth forecast for non-cloud infrastructure at 17.9% in 2024 reflects that even though most of the growth will come from cloud spending, general non-cloud dedicated systems are consolidating the recovery this year.

IDC's service provider category includes cloud service providers, digital service providers, communications service providers, hyperscaler, and managed service providers. In 3Q24, service providers as a group spent $54.2 billion on compute and storage infrastructure, up 113.8% from the prior year. This spending accounted for 70.6% of the total market. Non-service providers (e.g., enterprises, government, etc.) also increased their spending to $22.6 billion growing 37.5% year-over-year. IDC expects compute and storage spending by service providers to reach $183.1 billion in 2024, growing at 73.5% year-over-year.

On a geographic basis, year-over-year spending on cloud infrastructure in 3Q24 showed very positive results across all regions where the fastest growing regions were the USA and China showing triple-digit growth of 148.3%, and 100% each. The regions that showed double-digit growth were APeJC, Japan, Western Europe, Canada, and Latin America with 90.3%, 73.5%, 40.1%, 38.5%, and 34.8%, respectively. While Middle East & Africa showed digit growth of 6.7%, Central & Eastern Europe was the only one declining at -1.7%.

Long term, IDC predicts spending on cloud infrastructure to have a compound annual growth rate (CAGR) of 24.2% over the 2023-2028 forecast period, reaching $325.5 billion in 2028 and accounting for 78.8% of total computing and storage infrastructure spend. Shared cloud infrastructure spending will account for 79.1% of the total cloud spending in 2028, growing at a 25.2% CAGR and reaching $257.4 billion. Spending on dedicated cloud infrastructure will grow at a CAGR of 20.7% to $68.2 billion. Spending on non-cloud infrastructure will also rebound with a 7.6% CAGR, reaching $87.5 billion in 2028. Spending by service providers on compute and storage infrastructure is expected to grow at a 17.1% CAGR, reaching $233.0 billion in 2028.