At infra/STRUCTURE 2024, held in September at the Wynn Las Vegas, Jabez Tan, Head of Research with Structure Research, provided insights into the transformative impact of artificial intelligence (AI) on cloud computing and data center infrastructure. His analysis revealed a seismic shift in the industry driven by rapid AI adoption.

Cloud Growth Acceleration

Despite initial skepticism about sustainability, the cloud market has experienced significant growth acceleration in recent years. Jabez highlighted that “as we head to the end of 2023 into 2024, you saw this re-acceleration of growth, particularly from the major players.” This trend is particularly evident in Azure’s remarkable resilience and growth.

AI’s Growing Share of Cloud Revenue

Microsoft’s Azure serves as a prime example of AI’s increasing importance in cloud services. According to Jabez, “AI is accounting for a greater percentage of their overall growth… now represents eight percentage points of growth.” This translates to approximately $1.2 billion in AI-attributed revenue per quarter for Azure.

Major cloud providers are aggressively investing in AI infrastructure, with Google asserting that “the risk of under investing is dramatically greater than the risk of over investing.” This sentiment reflects the industry-wide belief in AI as a critical technological shift.

Data Center Capacity Expansion

To meet the growing demand, hyperscalers are rapidly expanding their data center capacity across both traditional and emerging markets. Jabez revealed, “the US market pipeline is about 60 gigawatts of capacity. You’re seeing a mix of established markets like Northern Virginia, but also markets that are not considered a traditional tier one market.”

The GPU market is evolving to cater to AI needs. Jabez estimates that “just over 50 gigawatts of old, advanced data set or size” will be required for the entire GPU market. This demand is driving innovation in cooling technologies, specifically “direct chip cooling factors to cater for these GPU clusters moving forward.”

Future Outlook

Jabez concluded by emphasizing that we are still in the early stages of AI growth. His recommendation is to stay adaptable. As the industry continues to evolve, data center operators and cloud providers must remain agile and prepared for the transformative impact of AI on infrastructure demands and market dynamics.

Attendees of the annual infra/STRUCTURE summit receive a copy of the presentation materials.

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