In 2024, global IT spending grew by 8.3%, driven largely by the expansion of generative AI infrastructure and the continued migration of enterprises to public cloud services. Despite global uncertainties, hyperscalers like Microsoft, Alphabet, and Meta Platforms ramped up their capital spending, with a nearly 50% increase in data center investments. This contributed to cloud revenue growth of over 20%, while overall IT services maintained a 7% growth rate. Additionally, the semiconductor industry saw significant gains, with a 19% growth spurred by AI-related demand, particularly for GPUs and high-bandwidth memory.
2025 global IT spending boosted by AI and hardware
Looking ahead to 2025, global IT spending is projected to grow by 9%, outpacing global GDP growth. Hyperscalers are expected to maintain strong revenue growth, and software spending will continue its upward trajectory, fueled by digital transformation and AI integration. The semiconductor sector, benefiting from ongoing AI investments, is forecasted to grow by 12%. However, the outlook remains uncertain due to potential changes in U.S. trade policies and the evolving global economic landscape, particularly in China. Despite these risks, the technology sector is expected to maintain a positive long-term growth trajectory, with AI and cloud services driving continued demand across industries.
"We maintain a positive long-term view of the technology industry. Industries from health care to energy will increase their investments in IT, and AI in particular, to increase sales, hasten R&D, and achieve operational efficiency," says Andrew Chang, Technology Director, S&P Global Ratings.
Global IT growth forecasts: Key takeaways
- Global IT Spending: Expected to grow 9% in 2025, driven by AI spurring massive data center spending and traditional hardware investments.
- Software & IT Services: Steady growth; semiconductors to see double-digit growth due to AI.
- U.S. Tariffs: Potential risk to IT consumption, especially for consumer-focused and enterprise hardware.
- Diversification: The tech industry is diversifying its supply chain but is still heavily dependent on China.
2024 highlights
- AI Investments: S&P Global Ratings’ estimates capital spending by large data center players (Microsoft, Alphabet, and Meta Platforms) increased nearly 50% to about $160 billion.
- Cloud Revenues: Grew over 20%, with IT services growth near 7%.
- PC & Smartphone Shipments: Rebounded after a two-year downturn; global server shipments grew 7%, but industry revenues jumped more than 40% to nearly $200 billion.
- Hyperscalers: We estimate hyperscalers now account for about 70% of total U.S. server spending.
2025 outlook
- GDP Growth: Global 3.0%, U.S. approx. 2.0% area, Eurozone 1.2%, China 4.1%.
- Given the size of the U.S. economy, policy action on any of these fronts can affect our outlook for global IT spending.
- IT Spending: Forecasted 9% growth, higher than in 2024 and with a high degree of variability due to U.S. trade policies.
- Hyperscalers: Continued strong revenue growth well above 20%, supported by gradual monetization of AI investments.
- Software: Modest grow acceleration to 10%, driven by digital transformation and AI integration.
- Hardware: Material improvement in 2025 as enterprises transition to the cloud and ramp up their investments in GenAI projects.
- Semiconductors: Will outgrow the overall IT industry again, at near 12% growth, due to AI compute adoption and a rebound in non-AI-related demand.
- Network Equipment: Projected 7% revenue growth after a downturn in 2024.
- Mobile Telecom Equipment: Modest growth expected after declines in 2023 and 2024.
- Storage: Gradual recovery with 4% revenue growth.
- PCs & Smartphones: Shipments to grow 2%-3%, but industry revenues should be higher given a gradual infusion of AI-enabled devices.
- Servers: Shipments to grow 4%, with revenues rising 10%-20%.
Smartphone sales returned to growth in 2024
Risks and opportunities
- U.S.-China Trade Relations: Deterioration in China’s relationship with U.S. or Taiwan, or interruption to the global supply chain, will have a disproportionate impact on overall global IT consumption.
- AI Investments: Continued strong growth but potential for volatility post-2025.
- Regulatory Environment: Stricter cybersecurity regulations driving IT investments.
The bottom line
- Despite geopolitical uncertainties, the tech sector is poised for robust growth, with AI and cloud services leading the charge.
- Positive Long-Term View: We maintain a positive long-term view of the technology industry and believe the sector to become less cyclical, with increasing investments across industries.
- AI & Cloud: Key drivers of growth, with as-a-service spending becoming more prevalent.
Semiconductor tailwinds continue into 2025