Generative AI requires unprecedented levels of computational power. Training Large Language Models (LLMs) such as GPT-4, which underpin many Gen AI applications, requires massive parallel processing capabilities and vast amounts of data storage.
Today's data centers are equipped with specialized hardware such as Graphics Processing Units (GPUs) and Tensor Processing Units (TPUs) designed to handle the complex mathematical operations required for AI and machine learning tasks. These facilities also incorporate advanced cooling systems, high-bandwidth networking, and sophisticated power management to support the intensive workloads of Gen AI applications.
Increasing spending on data center systems reflects the need for continuous upgrades and expansions to keep up with the growing demands of Gen AI. Enterprises today are investing in more powerful servers, expanding storage capacity, and strengthening their network infrastructure to support the development, training, and deployment of Gen AI models.
Reflecting this, Gartner is predicting a staggering 24% increase in spending on data center systems in 2024, a significant increase from its previous forecast of 10% growth.
John David Lovelock, distinguished vice president analyst at Gartner, explains: “The need for AI-generation computing power is being felt throughout the data center, and spending in the space is reflecting this strong demand.”
While data center systems are booming, the IT services sector is facing a slight slowdown: The forecast for IT services spending growth in 2024 has been revised downward to 7.1% from the previous forecast of 9.7%. The adjustment is driven in part by slowing spending across subsegments such as consulting and business process services.
But the slowdown is likely to be temporary: Lovelock points out: “The CIO change fatigue seen earlier this year is now easing and the backlog of contracts stretching back to Q3 2023 is clearing. We expect to see a bigger rush of demand towards the end of the year to make up for the slow start.”
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