Sector News

Enterprise cloud spend jumped in Q4, nudged upward by AI

February 10, 2024
Advanced Industrial Solutions

As annual enterprise cloud spend hurtled past the $500 billion threshold last year, AI investments began to feed growth in the infrastructure services market. The immediate impact on overall IT spend has been modest, according to analyst firm Gartner, but generative AI investments registered in cloud.

“It takes a lot to move the needle, but AI has done just that,” the SRG report said.

A sunnier economic outlook also helped unleash Q4 cloud spend, making it difficult to parse the various factors driving enterprise consumption.

“That’s a bit like trying to nail down a piece of jelly,” John Dinsdale, SRG chief analyst, told CIO Dive in an email. “AI isn’t just a service offering but it’s a foundation technology that underpins lots of other services.”

Larger AI revenues loom as hyperscalers focus on infrastructure build outs and enterprises identify profitable use cases.

“Relative to the scale of the underlying market, the AI numbers might be small, but they are enough to make a difference in the market trajectory,” Dinsdale said.

While all three of the big hyperscalers reported double-digit year-over-year revenue growth during the final three months of 2023, the massive scale of the market limits the size of percentage point gains.

“The cloud market will never return to the growth rates seen prior to 2022,” the report said. But stable growth will nonetheless yield huge annual increases going forward.

by Matt Ashare

Source: ciodive.com

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