AI Infrastructure market is anticipated to grow at a CAGR of 29.8% during the forecast period (2024-2031). AI Infrastructure refers to the integration of hardware, software, and network resources required to develop, deploy, train, and manage AI models. Increasing demand for high-performance computing power for processing large datasets in AI training and inference, cloud-based AI platforms, and the increasing adoption of AI solutions in healthcare, manufacturing, and financial sectors are factors propelling the growth of the market. Deploying machine learning (ML) models can transform client experiences by delivering personalized, timely, and relevant interactions. Companies utilize AI platforms for such deployments. For instance, Wealthsimple, a Canadian investment company, uses the NVIDIA AI platform to speed up ML model deployment for client experiences. As of 2024, Wealthsimple manages over approx. $21 billion in assets, supports over 30 AI models. 

Market Dynamics

Increased Investments in Cloud Regions

The cloud regions are huge investments in the globalization of AI infrastructure, which further fuels advanced services such as AI Agents and Oracle Cloud Infrastructure (OCI) supercluster, the largest AI supercomputer in the cloud. In addition, governments and corporations are investing in countries such as China, the US, Malaysia, and the European Union (EU) through national strategies and funding to maintain technological competitiveness.  For instance, in October 2024, Oracle planned to invest over $6.5 billion in a cloud region in Malaysia to accelerate the digital economy in the country, driving innovation led by AI. The region offers more than 150 infrastructure and SaaS services that include OCI Generative AI Agents, accelerated computing, and OCI Supercluster. It also offers Oracle autonomous database, heatwave MySQL database service, oracle cloud VMware Solution, OCI Kubernetes engine, and Oracle fusion cloud applications suite. Prominent cloud companies include strong security measures, such as frequent upgrades, multi-factor authentication, and data encryption. These features aid secures government information against online attacks. Market players such as Amazon Web Services (AWS) provide a global infrastructure and secure, scalable, and mission-focused solutions to the Department of Defense (DoD) to meet the mission, drive efficiencies, increase innovation, and secure critical workloads.

AI-Driven Innovation Across Industries

AI adoption in industries is making operations more efficient, and cost-effective, and giving advanced products, which develops a need for infrastructure such as complex data and AI algorithms. AI hubs are emerging as key sites for AI research and development, promoting cooperation among the government, private, and academic sectors. Cities such as Silicon Valley, Beijing, and Toronto are major AI hotspots, where the adoption of AI is being accelerated across a range of industries by technological developments. In May 2024, Vertiv recently launched its AI Hub to help and provide expert information and, in addition, will offer resources and reference designs for planning AI-ready infrastructure. The Vertiv AI Hub features white papers, industry research, tools, power, and cooling portfolios designed for retrofit and greenfield applications.

Market Segmentation

• Based on the offering, the market is segmented into Compute, GPU, CPU, TPU, NPU/AI accelerator, and Other, Memory, GDDR, HBM, and On-Chip Memory.

• Based on the network, the market is segmented into storage and server software.

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

• Based on the end user, the market is segmented into enterprises, healthcare, BFSI, automotive, retail & e-commerce, media & entertainment, and others, government organizations, and cloud service providers.

Compute Segment is projected to Hold the Largest Market Share

The popularity of Edge AI is increasing with the reduction in latency and offloading of computing powers to local devices by support from powerful optimized chip support. For instance, in September 2024, Alibaba Cloud open source 100 multimodal models Qwen 2.5, the new text-to-video AI model is enhancing consumers' visual creativity and its refreshed full-stack infrastructure which responds to the demand for high-end robust AI computing, a new cloud product line and innovative services that reinforce computing power, network topology, and data center design.

• In August 2024, ClearML introduced the AI infrastructure control plane, a universal operating system that offers IT teams and DevOps full control over their AI infrastructure to provide better, self-serve experiences in AI computing and high-performance computing capabilities in clusters.

Cloud Segment to Hold a Considerable Market Share

The growing demand for cloud services is among the major factors for the expansion of AI infrastructure. As industries increasingly rely on scalable, flexible, and cost-effective solutions, the adoption of specialized hardware such as GPUs (Graphics Processing Units) and TPUs (Tensor Processing Units) is becoming essential for supporting the resource-intensive nature of AI workloads. Major market players have been investing in developing AI ecosystems in different nations. Development of AI ecosystem For instance, in September 2024, Microsoft announced its largest single investment in Brazil, with plans to spend $2.55 billion in cloud and AI infrastructure over three years. This initiative aims to boost the development of the AI ecosystem in Brazil, accelerating the country’s AI innovation. Microsoft will also support the country’s long-term competitiveness with the program ConectAI, training 5 million people over the next three years with AI skills, creating long-term benefits for the Brazilian economy.

• In September 2024, LG AI Research trained Exaone 3.0, the latest generative AI model on Google Cloud's infrastructure for AI: TPUs and GPUs on Google hypercomputer, Google Cloud Storage, and the Jupiter network.

• In October 2024, Singtel introduced an AI Cloud Service named RE: AI, that democratizes AI for organizations. The customers can build, operate, and scale their applications using advanced AI computing infrastructure along with a diverse network platform and have no complex overheads associated with them. Singtel will democratize AI by working with strategic partners through a research and development AI Cloud platform to enable adoption in advanced manufacturing, and ecosystem development, and power the workforce with AI skills training.

Regional Outlook 

The global AI Infrastructure market is further segmented based on geography including North America (the US, and Canada), Europe (the UK, Germany, France, Italy, Spain, Germany, France, and the Rest of Europe), Asia-Pacific (India, China, Japan, South Korea, and Rest of Asia-Pacific), and the Rest of the World (the Middle East & Africa, and Latin America). 

Digital Transformation in the Asia-Pacific Region

Digital transformation and the increasing number of data centers in nations such as China and India are major drivers for the growth of the AI infrastructure market. Many companies in Asia-Pacific are adopting AI-driven digital solutions to enhance productivity, customer experience, and operational efficiency. According to the India Brand Equity Foundation, (IBEF), in June 2023, the Indian data center industry was valued at $4.4 billion in 2020 and is expected to grow by $ 8.0 billion during the forecast period from 2021 to 2026. The Indian Public Cloud Services market is expected to reach US$ 13.5 billion with a compound annual growth rate of 24% during 2021-2026. The demand for collecting and storing data has been fueled by data-intensive technologies such as Big Data and IoT. 

Global AI Infrastructure Market Growth by Region 2024-2031

North America Holds Major Market Share

The AI infrastructure market in North America is experiencing rapid growth owing to increasing government support and rising demand for advanced AI technologies, driven by innovations in cloud computing, data centers, and high-performance computing (HPC). Government support, especially in the form of strategic investments, rules, and public-private partnerships, is essential to the expansion of the AI infrastructure sector in North America. For instance, in November 2024, The White House launched a new Task Force on AI Datacenter Infrastructure to coordinate policy across government.  Under the direction of the White House Deputy Chief of Staff's office, the National Economic Council, and the National Security Council, the Interagency Task Force will facilitate efficient policy coordination to promote data center development operations by national security, economic, and environmental objectives. Developers, investors, firms in the energy sector as well as the AI companies would benefit from its support for the growth of AI data centers.

• The Department of State, Amazon, Anthropic, Google, IBM, Meta, Microsoft, Nvidia, and OpenAI are some of the members that constitute the Partnership for Global Inclusivity on AI. The Department of State plans to invest $10 million in foreign assistance for bridging the AI access gap, and $23 million would be put towards responsible use and governance of AI. Programs that would fall under such an investment include AI advanced democracy, $12 million; capacity building for AI, $5 million; AI-based prevention of online hate, $3 million; and $1.2 million for a framework of Safe, Secure, and Trustworthy AI Policy.

Market Players Outlook

*Note: Major Players Sorted in No Particular Order.

The major companies serving the AI infrastructure market include Amazon Web Services, Inc., Google, Intel Corp., Microsoft, NVIDIA Corp., and others. The market players are increasingly focusing on business expansion and product development by applying strategies such as collaborations, mergers and acquisitions to stay competitive in the market. 

Recent Developments

• In September 2024, BlackRock, GIP, Microsoft, and MGX announced a $100 billion investment partnership to boost American AI competitiveness and meet the increasing demand for energy infrastructure. It will invest in new data centers and energy infrastructure, primarily in the US, supporting AI innovation and economic growth. NVIDIA supports the partnership, offering expertise in AI data centers and factories. The partnership includes $30 billion in private equity capital and may potentially mobilize up to $100 billion in total investment potential.

The Report Covers

• Market value data analysis of 2023 and forecast to 2031.
• Annualized market revenues ($ million) for each market segment.
• Country-wise analysis of major geographical regions.
• Key companies operating in the global AI Infrastructure market. Based on the availability of data, information related to new products, and relevant news is also available in the report.
• Analysis of business strategies by identifying the key market segments positioned for strong growth in the future.
• Analysis of market-entry and market expansion strategies.
• Competitive strategies by identifying ‘who-stands-where’ in the market.