How To Cash In On Massive Datacenter Spending

Both the global economy and spending on information technology are so vast that it is hard to really grasp the numbers sometimes. But we need to get a handle on those numbers to see where the organizations we all work for in the IT sector stand in relation to the whole.

Gartner has just revised its forecast for IT spending in 2025, which presents a mixed bag of hope and confusion that will net out to higher spending in some areas and reductions in other areas, and you will be affected by the changes in some fashion both directly and indirectly.

According to the World Bank, the sum total of all goods and services sold on Earth in 2024 was valued at $111.33 trillion, up 4.1 percent from the $106.7 trillion aggregate gross domestic product in 2023. Back in early June, the World Bank trimmed its growth projection for 2025 to 2.3 percent, down a half point from where it was in the prior forecast for this year put out in January as this year was getting started. Provided there are not any global GDP revisions for 2024, that would put worldwide GDP at $113.9 trillion for the year.

This is the lowest growth rate for global GDP since the Great Recession started back in 2008, excepting the recession that was caused by the coronavirus pandemic in 2020. The World Bank says that the slowing growth, which is not expected to slip into recession (meaning “two consecutive quarters of negative growth,” as the economists say) in 2025, but 70 percent of the national economies on Earth are expecting slowing growth due to trade wars and uncertainty in national policies relating to business. If the anemic forecasts for global GDP growth hold for 2026 and 2027, this will be the slowest 7/10ths of a decade for economic growth on Earth since the 1960s.

IT spending tends to grow faster than global GDP since computing and networking increasingly is embedded in the very fabric of our home and work lives.

After its revisions for 2023 and 2024 and updated forecast for 2025, here is what IT spending across the key IT segments looks like:

Datacenter systems spending – which means dough doled out for buying servers, storage, networking – has exploded thanks to the GenAI boom, and once again the spending has been boosted a bit for 2024 and a lot for 2025. Gartner did not project out to 2026 and beyond this time around as it hinted back in its January forecast. Perhaps there are too many variables right now, or perhaps they don’t want to go on the record unless you spend a lot of money on Gartner reports.

Gartner thinks spending on datacenter systems grew by 40.3 percent in 2024 to $333.37 billion, and that it will grow a little faster in 2025 (by 42.4 percent) to hit $474.88 billion.

These are astounding numbers. A decade ago, just before the first wave of AI machine learning hit, spending on datacenter systems was around $140 billion, and when that first wave hit it averaged around $170 billion from 2014 through 2020 excepting a $210 billion level set in 2018 where the hyperscalers and cloud builders did a huge revamp of their infrastructure that was only partly due to AI and was mostly related to a shift to renting cloud capacity for a portion of enterprise workloads.

If you had pegged your salary growth to IT spending growth, or better still datacenter systems growth, for the past decade and a half, you would have had some raises and some paycuts. But since the GenAI boom, you would have been rolling in it. There is still time, but we strongly suspect that growth rates will start slowing for datacenter systems spending in the coming years, but still be in the double digits nonetheless well into 2030. We don’t think anyone can predict with accuracy much beyond five years.

Now, some of that growth in datacenter systems spending is due to inflation, and so we can adjusted the Gartner data for the inflation rate for the US dollar. When you do that using 2021 dollars, as we have done, the spending line rotates clockwise a little bit around the 2021 datapoint:

So older spending looks bigger and more recent spending looks smaller. It is still a lot of dough, no matter.

The Gartner IT spending forecast has device spending (meaning for PCs and smartphones) as well as communication services (meaning data services for our clients and for datacenters) added into it. We extract these out to figure out trends for what we call “Core IT,” which means datacenter systems, enterprise software, and IT services added together.

Back in 2012, which is where this public dataset from Gartner starts, this Core IT spending was just under $1/3 trillion, and it hovered around $1.4 trillion for a few years before the AI rise began in earnest in 2018. By 2024, it has more than doubled to $3.06 trillion, up 10.4 percent compared to 2023’s levels, and the forecast is for Core IT spending to rise by 10.8 percent in 2025. This is nearly 4X faster growth for Core IT spending compared to global GDP growth.

Interestingly, back in 2012, Core IT represented 37.2 percent of overall IT spending, and that share has grown every year to the point that in 2025, if all pans out, 62.4 percent of the anticipated $5.44 trillion in global IT spending will be for that Core IT.

The lesson here, then, is to key your pay raises to global Core IT spending and definitely not to global GDP. Thanks to the GenAI boom, companies are going to buy or rent a lot of hardware and software, and enterprise-grade AI models, which are the kernel if a new wave of applications, are not going to be cheap just like GPU-accelerated systems already are not.