• Synergy Research Group has been tracking the cloud/datacentre sector for years
• It has just released its first-half (H1) 2024 overview for the market, which grew by 23% to hit $427bn
• The research firm highlights an AI-fuelled surge in datacentre investments, which grew by 30%

The value of the global cloud service and infrastructure sector grew by 23% year on year in the first half of 2024 to reach $427bn, with AI trends driving cloud services demand and a surge in datacentre infrastructure investments alike, according to a new report from Synergy Research Group. 

And for a change, the highest spending growth is in the underlying infrastructure rather than in cloud services. “For a long time now the growth rate in cloud services has far outpaced growth in spending on cloud datacentre infrastructure, but that has temporarily switched around, driven by heavy investments in generative AI technology,” according to the Synergy Research team, as the growth in combined spending on IaaS, PaaS and SaaS services hit 21% while investments in public and private cloud datacentre infrastructure grew by 30%. 

“Cloud markets were already growing strongly and AI has now supercharged some of that growth. We see this particularly in the rollout of new and expanded hyperscale datacentres,” noted John Dinsdale, a chief analyst at Synergy Research. 

And as the chart above shows, there’s no sign of the hyperscale datacentre operators capping their spending any time soon. “As hyperscale operators continue to drive the broader IT market, so too does their infrastructure footprint grow. Compared with the first half of 2023, the operational capacity of their already huge datacentre network grew by 24%. More impressively, the size of their pipeline of future datacentres grew by 47% as they continue to ramp up investments,” according to the research firm. 

As we’ve noted previously, the US is the centre of much of that activity and the growth pipeline looks strong for years to come – see US dominates hyperscale datacentre, colocation markets and Hyperscale datacentre capacity doubling every four years – report.

And as those investments grow, so the increasing focus on supporting AI workloads is “changing the structure of the supply side of the industry,” noted Dinsdale. “Over the last 10 years ODMs [original device manufacturers] have continued to eat up server market share,” but Nvidia’s “explosive growth, which is largely fuelled by sales to hyperscalers, either directly or indirectly”, has revamped that part of the cloud infrastructure sector. In the first half of this year, “revenues from Nvidia’s datacentre business unit far surpassed the combined revenues of Dell and HPE in datacentres,” according to Dinsdale. 

As a reminder, Nvidia’s revenues from datacentre operator customers for the first half of the year totalled $48.9bn and continue to grow at an incredible pace: The AI chip vendor’s second-quarter datacentre revenues hit $26.3bn, up by 154% year on year and by 16% quarter on quarter.  

In the cloud infrastructure services (IaaS, PaaS) and SaaS sector, the overall market leaders are Microsoft, Amazon Web Services (AWS), Google and Salesforce, according to the Synergy research team. 

- Ray Le Maistre, Editorial Director, TelecomTV