2024 Was a Boon Year for Sales of Data Center Gear - Thanks to Generative AI

RENO, NV, January 7, 2025

Synergy Research Group data shows that worldwide spend on data center hardware and software in 2024 will grow by 34% from 2023, pushing it to an all-time high. While there was growth across the board, the increase was thanks in large part to a 48% jump in spending on public cloud infrastructure, which now accounts for 55% of the total market. After some marginal growth over the previous five years, sales to enterprise clients did burst into life in 2024, increasing by 21%. For 15 years now the growth in public cloud services has been driving increased investment in cloud infrastructure and constraining spend on enterprises’ own data centers. This continued in 2024 but the new market driver in the year that provided a huge boost to spending was generative AI. Cloud providers and enterprises alike were rushing to buy GPUs to support their generative AI workloads. The big story among vendors was the explosive growth of Nvidia. While much of this showed up through increased revenues for its server and system vendor clients, Nvidia’s sales directly to hyperscale and enterprise clients catapulted it into the ranks of leading data center vendors. Other major growth stories were Inspur, Super Micro and the continued dominance of ODMs selling to hyperscalers.

Total data center infrastructure equipment revenues, including both cloud and non-cloud hardware and software, will reach $282 billion in 2024, with public cloud infrastructure now accounting for $156 billion of the total. The figures are based on actual data for the first three quarters of 2024, plus Synergy’s forecast for Q4. The main hardware-oriented segments of servers, storage and networking in aggregate accounted for 85% of the data center infrastructure market. OS, virtualization software, cloud management and network security account for the balance. Excluding ODMs, then Dell is the overall leader in server and storage segment revenues, with Inspur being a clear leader in server sales to public cloud providers. Cisco is the leader in the networking segment, while Microsoft features prominently in the rankings due to its position in server OS and virtualization applications. Nvidia now features heavily as a supplier both to other system vendors and directly to service providers. Outside of these five, the other leading vendors in the market are HPE, Super Micro, Lenovo, VMware, Huawei, IBM and Arista Networks. 

“GPUs and generative AI systems lit a fire under the market in 2024, resulting in record growth rates for the industry. While the ongoing success of public cloud has been the main driving force behind data center investments for well over a decade now, no-one imagined a 2024 market for data center gear reaching over $280 billion,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “It is good to see the enterprise side of the market growing again, though the long-term trend remains. Ten years ago sales to public cloud providers accounted for just 20% of the market. That rose to 55% in 2024, and our forecast shows it reaching almost 65% five years from now.”