Global IT spending forecast to reach $5.0T this year

Comms services and AI contributing to increase, but vendors are taking 'risks'

Gartner expects global IT spending to grow 8 percent in 2024 to $5.06 trillion in a revised forecast from the 6.8 percent uptick which the analyst predicted in January.

Worldwide IT spending was on track to reach $8 trillion before the end of the decade, Gartner said.

John-David Lovelock, distinguished VP analyst, told The Register that the increased figure for IT spending this year was largely down to repricing in communication services. "That makes up the majority of that bump in dollars," he said.

In January, Gartner forecast 2.3 percent growth for the communication services sector. That figure has been elevated to 4.3 percent to reach $1.55 trillion.

However, the increasing investment associated with generative AI is also having an impact on spending, at least among vendors.

For example, growth in spending on datacenter systems has gone from 4 percent in 2023 to 10 percent in 2024 (revised up from 7.5 percent), primarily due to planning for GenAI initiatives, according to Gartner.

The analyst also sees "gold rush" spending by service providers supporting large-scale GenAI projects, such as servers and semiconductors. In 2024, AI servers are projected to account for close to 60 percent of hyperscalers' total server spending.

Lovelock reckons AI investments are different from normal R&D spending cycles in upgrading products.

"If you look at the Google, Amazon, Microsoft, and Alibaba … they typically buy a bunch of servers and hope that next year somebody is going to need them for their cloud offer. There is a risk this time in that they are building up specific AI servers, so if people are not creating models next year and are not heavily inferencing AI models next year, then there would be revenue shortfall from their expectations."

However, Lovelock says the risks are not markedly different from other areas where tech vendors invest, only to find later they may need to lay people off and move employees around the business.

Gartner has said that 2023 was the year when vendors were expected to have an AI, and this year they will invest and users will pilot projects. Next year, Gartner expects more significant user projects in AI.

Microsoft revealed recently that it is still trying to convince biz users of the value of integrating Copilot into its productivity wares, and Dell - like many others in the industry - is running proof of concepts with customers.

Spending on IT services is expected to grow 9.7 percent year-on-year in 2024 to reach $1.52 trillion, making it the largest market that Gartner tracks. Expected growth in the market was increased from 8.7 percent.

The slowest growing segment in 2024 is set to be devices, due to increase by 3.6 percent to $688 billion, Gartner said.

Long gone are the days when PC makers thought that collectively selling 350 million units a year was sustainable. It happened in 2021 and likely won't happen again for some time. ®

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