AI Infrastructure Market Size, Share & Industry Analysis, By Offering (Hardware and Software), By Deployment (On-premises, Cloud, and Hybrid), By End-User (Enterprises, Government Organizations, and Cloud Service Providers), and Regional Forecast, 2024 – 2032

The global AI infrastructure market size was valued at USD 36.59 billion in 2023. The market is projected to grow from USD 46.15 billion in 2024 to USD 356.14 billion by 2032, exhibiting a CAGR of 29.1% during the forecast period.

AI infrastructure refers to the foundational hardware and software resources necessary to develop, deploy, and manage Artificial Intelligence (AI) applications. It encompasses a wide range of components that work together to support the complex computational tasks associated with AI, including data processing, model training, and inference. High-performance infrastructure is crucial for handling the computational needs of training and running AI models, particularly deep learning models that require significant processing power. Cloud providers offer AI services that enable businesses to leverage AI capabilities without needing to invest heavily in on-premises infrastructure. Investments in AI and machine learning are at an all-time high, with governments, venture capitalists, and enterprises investing heavily in AI technologies. These investments are driving the development of more advanced AI infrastructure solutions, as organizations seek to capitalize on the potential of AI to drive innovation, improve productivity, and gain a competitive edge.

The COVID-19 pandemic accelerated digital transformation efforts across various sectors. Organizations increasingly adopted AI to enhance operational efficiency, improve customer experience, and make data-driven decisions. With the shift to remote work, there was a greater reliance on cloud infrastructure. AI infrastructure saw growth as companies moved their AI workloads to the cloud to benefit from scalability, flexibility, and remote accessibility.

Our scope of work included solutions offered by companies, such as Oracle Corporation, IBM Corporation, Salesforce, Inc., Nvidia Corporation, Amazon.com, Inc., ConcertAI, and others.

AI Infrastructure Market Trends

Rise in Adoption of Hybrid and Multi-Cloud Deployments in Enterprises Aids Market Growth

Enterprises are increasingly adopting hybrid and multi-cloud strategies to leverage the strengths of both on-premises and cloud environments. This approach provides flexibility, scalability, and cost optimization. In addition, hybrid and multi-cloud provide various benefits such as, risk mitigation and increased flexibility, allowing businesses to choose the best environment for different AI workloads. For instance,

• In April 2024, According to the sixth annual global Enterprise Cloud Index (ECI), a survey conducted by Nutanix revealed that multi-cloud and hybrid deployment is the leading deployment model in India. Approximately 44% of businesses in India use these models, which surpasses all other countries surveyed in the ECI.

Furthermore, AI infrastructure is increasingly incorporating AI-driven data management tools. These tools automate data integration, cleansing, and transformation processes, enabling more efficient handling of large datasets required for AI applications. These factors are expected to fuel market growth during the forecast period.

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AI Infrastructure Market Growth Factors

Growing AI Adoption and Data Explosion Across Industries Fuels Market Growth

Industries such as healthcare, retail, finance, manufacturing, and automotive are increasingly adopting AI to enhance efficiency, improve customer experiences, and drive innovation. This broad adoption fuels the demand for robust AI infrastructure. Moreover, the exponential growth of data generated from various sources, including Internet of things (IoT) devices, social media, and enterprise systems is driving the need for artificial intelligence infrastructure to process, analyze, and derive insights from vast datasets.

In addition, governments and enterprises are increasingly investing in AI research and development. Funding and incentives for AI projects are boosting the demand for infrastructure that can support advanced AI initiatives. These factors are set to shape the future of the AI infrastructure market, leading to continuous growth and development. For instance,

• In May 2024, Nvidia launched the AI Infrastructure and Operations Fundamentals course that provides enterprise professionals with training on the operational and infrastructure aspects of AI.

RESTRAINING FACTORS

High Implementation Cost and Complex Integration May Hinder Market Growth

Building and maintaining AI infrastructure can be expensive. The cost of specialized hardware such as (GPUs, and TPUs), software licenses, and skilled personnel can be prohibitive for many organizations, especially Small and Medium-Sized Enterprises (SMEs).

Moreover, integrating artificial intelligence infrastructure with existing IT systems and workflows can be complex and time-consuming. Legacy systems may not be compatible with modern AI technologies, requiring extensive modifications or replacements. Furthermore, handling large volumes of sensitive data raises significant privacy and security issues. Organizations must ensure compliance with data protection regulations, which can delay compliance and slow down AI infrastructure projects, thereby hindering market growth.

AI Infrastructure Market Segmentation Analysis

By Offering Analysis

Growing Adoption of Accelerated Processing Hardware among Businesses Propels Hardware Segment Growth 

Based on offering, the market is divided into hardware (GPU {Graphics Processing Unit} Servers, AI Accelerators, TPUs {Tensor Processing Units}, and High-Performance Computing (HPC) Systems) and software.

Hardware captured the maximum share of the market in 2023. Hardware accelerators such as GPUs and TPUs can significantly speed up the processing of AI algorithms. This acceleration is crucial for applications requiring real-time or near-real-time analysis, such as autonomous vehicles, robotics, and financial trading systems. Specialized hardware enables the scaling of AI applications by efficiently handling large datasets and complex models. This scalability is essential for enterprises looking to expand their AI capabilities and manage increasing workloads.

Software is expected to grow at the highest CAGR in the coming years, as AI software programs offer automation and orchestration capabilities, streamlining the deployment, monitoring, and management of AI models. This reduces the manual effort required and ensures that AI applications run efficiently and reliably.

By Deployment Analysis

Cloud Segment Dominated Rising Demand for Cloud-based Advanced AI Services Among Large Enterprises

Based on deployment, the market is divided into on-premises, cloud, and hybrid.

Cloud captured the highest market share in 2023. Cloud platforms often provide a suite of advanced AI services, such as machine learning models, natural language processing, and computer vision APIs. These ready-to-use services enable organizations to integrate sophisticated AI capabilities without building them from scratch. Moreover, leading cloud providers offer robust infrastructure with high availability and redundancy. This ensures that AI applications have minimal downtime and can continue to operate even in the event of hardware failures.

Hybrid is anticipated to grow at the highest CAGR rate during the forecast period. Hybrid infrastructure allows seamless scalability, enabling organizations to scale up using cloud resources during peak times or for large-scale AI model training, without the need for significant capital investment in additional on-premises hardware. Additionally, hybrid infrastructure provides robust disaster recovery options by replicating data and applications in the cloud, ensuring business continuity in the event of on-premises failure.

By End-User Analysis

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Cloud Service Providers Segment Dominate with Rising Demand for Adoption of Edge AI Solutions among User

Based on end-user, the market is classified into enterprises, government organizations, and cloud service providers.

Cloud service providers captured the highest market share in 2023, as they offer edge AI solutions that bring AI capabilities closer to the data source. This reduces latency and bandwidth usage, enabling real-time processing for applications such as autonomous vehicles, IoT devices, and smart cities. Furthermore, cloud service providers offer elastic computing resources that automatically scale based on workload demands. This ensures that AI applications can handle varying levels of activity without manual intervention or significant upfront investment.

Enterprises are expected to grow at the highest CAGR in the coming years. AI infrastructure allows enterprises to analyze vast amounts of data and derive actionable insights, improving decision-making processes across various functions such as marketing, finance, operations, and human resources. Leveraging AI allows enterprises to provide personalized and proactive customer service by understanding customer preferences, predicting behavior, and delivering customized solutions.

REGIONAL INSIGHTS

By region, the market has been analyzed across five major regions, namely North America, Europe, Asia Pacific, Middle East & Africa, and South America.

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North America held the largest AI infrastructure market share in 2023. North America, particularly the U.S., is home to major tech companies such as Google, Amazon, Microsoft, and IBM, which are at the forefront of AI research and development, driving innovation in artificial intelligence infrastructure. Significant investment from both private and public sector companies are fueling the growth of artificial intelligence infrastructure. Venture capital funding, government grants, and corporate investments are supporting AI startups and research initiatives. Furthermore, North American companies are early adopters of cloud computing, which provides a scalable and flexible foundation for artificial intelligence infrastructure. For instance,

• In June 2024, ConcertAI partnered with Nvidia to advance clinical development solutions by using the ConcertAI CARA AI platform.

Asia Pacific’s AI infrastructure market is expected to grow at the highest CAGR during the forecast period. Several countries in the region have launched national AI strategies to promote AI research and development. For instance, China’s AI Development Plan aims to make the country a world leader in 2030. Japan, South Korea, and Singapore have established national AI frameworks to support innovation. Governments are providing significant funding and incentives for AI projects, including grants, subsidies, and tax incentives to encourage the development and deployment of AI technologies across various sectors. India is also emerging as a key player in the AI landscape, with a growing number of AI startups and a focus on leveraging AI for social impact. The Indian government’s AI strategy emphasizes research, skill development, and industry-academia collaboration.

• In May 2024, Amazon Web Services planned to invest USD 9 billion in Singapore by 2028 for cloud infrastructure. With this investment, the company aimed to create over 12,000 full-time equivalent job opportunities in Singapore businesses by 2028.

Europe is anticipated to grow at a prominent CAGR in the coming years. The region’s governments are actively promoting AI adoption through initiatives such as the European Commission’s AI strategy and Horizon Europe funding program. These initiatives aim to enhance AI research, development, and deployment across member states. European industries are increasingly collaborating on AI projects, often supported by government-backed consortiums and research collaborations. This collaborative approach helps share knowledge, resources, and best practices. London, Berlin, Paris, and Amsterdam are emerging as AI hubs, fostering innovation through tech startups, research institutions, and corporate R&D centers. These hubs are instrumental in driving artificial intelligence infrastructure adoption. For instance,

The Middle East and Africa (MEA) is expected to showcase noteworthy growth during the forecast period. The UAE and Saudi Arabia have launched ambitious AI strategies, including the UAE’s “AI Strategy 2031” and Saudi Arabia’s Vision 2030, with significant investments in AI infrastructure and development. Moreover, in South America, Brazil and Argentina are developing national AI strategies to guide investment and policy in AI development. Governments in these regions are investing in AI research and infrastructure, often in collaboration with international organizations. Owing to these factors, the market is expected to increase steadily in the region.

KEY INDUSTRY PLAYERS

Key Players Emphasis on R&D Investments to Widen Their Customer Base

Industry participants are concentrating on intensifying their geographical presence by presenting industry-specific services. Key companies are emphasizing on mergers and acquisitions with local firms strategically to hold their apex position across regions. Renowned industry participants are introducing new solutions to boost their customer base. Rise in R&D investments for product innovations is boosting industry expansion. Hence, prominent firms are quickly applying these initiatives to maintain their dominance in the industry.

List of Top AI Infrastructure Companies:

• Nvidia Corporation (U.S.)


• AIBrain (U.S.)


• IBM Corporation (U.S.)


• ConcertAI (U.S.)


• Oracle Corporation (U.S.)


• Salesforce, Inc. (U.S.)


• Amazon.com, Inc. (U.S.)


• Google LLC (Alphabet Inc.) (U.S.)


• Super Micro Computers, Inc. (U.S.)


• Intel Corporation (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• April 2024: Nvidia acquired Run:ai, an AI workload management startup company at a price of USD 700 million. The company would continue to invest in Run:ai’s portfolio under Nvidia’s DGX Cloud AI platform.


• April 2024: Microsoft partnered with Abu Dhabi’s G42, making a strategic investment of USD 1.5 billion to accelerate AI development in the UAE.


• October 2023:  Futureverse, an AI technology provider company, collaborated with Alibaba Cloud Company to provide reliable and robust cloud computing services to the JEN Music AI platform.


• March 2023: Nvidia launched DGX cloud service to provide enterprises access to its AI Infrastructure and software for training models for generative AI.


• March 2023: AWS and Nvidia partnered to develop optimized Artificial Intelligence (AI) infrastructure for developing generative AI applications and training complex Large Language Models (LLMs).

REPORT COVERAGE

The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product/service types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

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Report Scope & Segmentation