Spending on cloud infrastructure products for computing and storage increased significantly in the fourth quarter of 2024, according to market intelligence firm International Data Corp. (IDC). Its report shows that spending on these products, including both dedicated and shared IT environments, grew 99.3% year-over-year to $67 billion.
The cloud infrastructure segment’s growth outpaced the non-cloud segment, which grew by 25.8% in the same period to $22.0 billion. According to IDC, unit demand for cloud infrastructure increased by 33.5%, driven primarily by a rise in GPU server shipments.
“Cloud infrastructure spending growth continued outpacing market expectations again in the fourth quarter,” said Juan Pablo Seminara, director for IDC’s Worldwide Enterprise Infrastructure Trackers. “Even after raising some doubts about the necessity of large investments in AI infrastructure exposed by DeepSeek’s R1 initial impact that later proven been not that accurate, the industry is also understanding that the evolution from simple chatbots to reasoning models to agentic AI will require several orders of magnitude more processing capacity, especially for inferencing.”
Seminara noted that even by gaining efficiency on investments costs, IDC expects cloud infrastructure market growth of 17.8% CAGR for the following five years.
Shared cloud infrastructure spending reached $57 billion, showing a 124.4% increase compared to a year earlier. It accounted for 64% of total infrastructure spending in the fourth quarter of 2024, remaining the largest segment compared to dedicated and non-cloud deployments. Dedicated cloud infrastructure spending grew 21.8% year-over-year to $10 billion.
Mixed forecasts on different cloud infrastructure
IDC predicts cloud infrastructure spending will grow by 33.3% in 2025, reaching $271.5 billion. The non-cloud infrastructure segment, on the other hand, is expected to decline by 4.9% to $68.1 billion. The shared cloud infrastructure category is forecasted to increase by 25.7% year-over-year to $213.7 billion, while dedicated cloud infrastructure spending is expected to rise by 71.8% to $57.8 billion.
Spending on GPU-based accelerated cloud infrastructure is also expected to grow, reaching $157.8 billion in 2025 with a growth rate of 46.8%. The continued demand for AI infrastructure is a major factor in this growth, as new projects and existing backlogs drive investment.
Service providers, including cloud, digital, communication, hyperscaler, and managed service providers, spent $65.6 billion on compute and storage infrastructure in the fourth quarter of 2024, showing a 103.9% increase from the previous year. This accounted for 73.8% of the total market. Non-service providers, such as enterprises and government entities, increased their spending by 23.5% to $23.3 billion.
Fueling global growth
Geographically, the fastest growth in cloud infrastructure spending occurred in Canada and the United States, with increases of 151.8% and 125.3%, respectively. Other regions, including China, Japan, and Western Europe, also saw growth ranging from 14.3% to 99.6%.
IDC expects spending on cloud infrastructure to continue increasing over the next five years, with a compound annual growth rate (CAGR) of 17.8%. By 2029, spending is expected to reach $461.9 billion, accounting for 83.0% of total compute and storage infrastructure spending. Shared cloud infrastructure will remain dominant, projected to make up 80.5% of total cloud spending by 2029.