Hyperscalers to spend a trillion dollars on AI optimised hardware

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Hyperscalers to spend a trillion dollars on AI optimised hardware

The latest spending forecast from Gartner predicts that more than twice as much is being spent on AI-optimised servers compared with traditional servers. The analyst firm has forecast that $202bn will be spent on AI-optimised servers in 2025.

Gartner’s data shows that server spend amounted to approximately $130bn in 2022. This figure rose by a small amount in 2023, in line with Gartner’s forecast to $134bn as GPU servers began to ship.

The latest data shows that spending on datacentre systems, which includes servers, grew to $329bn in 2024 and is forecast to grow by over 23% this year, which means, according to Gartner, that $405bn of servers will be sold in 2025, driven by adoption of AI-optimised servers. Gartner predicts spending on AI-optimised servers to easily double spending on traditional servers in 2025, reaching $202bn.

However, the bulk of the servers purchased, as John-David Lovelock, distinguished vice-president analyst at Gartner, notes, is not being made by enterprise IT. By 2028, hyperscalers will operate $1tn dollars’ worth of AI optimised servers. “IT services companies and hyperscalers account for over 70% of spending in 2025,” said Lovelock.

While the hyperscalers will offer AI-optimised servers as part of their infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) offerings, Lovelock said they are mainly deploying them to offer generative AI (GenAI)-enabled services to businesses and consumers.

Gartner has also predicted that IT buyers will be spending 14.2% more on software this year. This is partly being driven by price increases as software providers embed AI into tier products. There is also 9% growth in the IT services market.

“Technology companies are starting to embed GenAI in their products and bumping the price a bit,” Lovelock said.

Looking at the device market, Gartner expects spending to increase 10.4%. While some of this growth is likely to come as a result of the PC refresh cycle as businesses upgrade to newer devices and the need to migrate over to Windows 11 before October 14th this year, manufacturers are increasinging prices, making AI PCs premium products.

These AI-enabled devices are designed to improve the performance of GenAI and AI-based applications, offering on-device AI inference capabilities. They potentially offer a means to deploy GenAI on local devices across the organisation, in a way that avoids data leakage that can occur when using cloud-based GenAI. However, there is no compelling reason for IT leaders to pay a premium for these devices yet.

“GenAI is sliding toward the trough of disillusionment, which reflects CIOs declining expectations for GenAI, but not their spending on this technology,” said Lovelock.

“For instance, the new AI-ready PCs do not yet have ‘must have’ applications that utilise the hardware. While both consumers and enterprises will purchase AI-enabled PC, tablets and mobile phones, those purchases will not be overly influenced by the GenAI functionality.”

Overall, Gartner forecasts that worldwide IT spending is expected to total $5.61tn in 2025, an increase of 9.8% from 2024.

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