On October 9, 2024, a report from Bain & Company highlighted a significant surge in demand for AI components, projecting a growth of 30% or more by next year, which is expected to outpace current production capacity. The report indicates that if demand for current-generation GPUs doubles by 2026, suppliers will need to significantly ramp up their output.
The increasing enterprise adoption of AI is reshaping technology infrastructure, impacting everything from microprocessors to large data centers. Major software vendors such as Microsoft, SAP, and Salesforce are integrating large language model capabilities into their products, further driving demand.
Bain predicts that the overall AI market could reach nearly $1 trillion by 2027, a substantial increase from under $200 billion in 2023. The firm anticipates annual growth of 40% to 55% for both AI hardware and software through 2027.
David Crawford, chairman of Bain's global technology practice, noted that there are already constraints in the GPU supply chain, with many clients reporting difficulties in accessing components. The high demand for GPUs has made them a strategic asset, with limited availability impacting enterprise operations.
As modernization of data and applications increases cloud spending, IT and finance leaders are facing budget challenges. The AI boom has led to soaring cloud costs, prompting multibillion-dollar investments in cloud infrastructure by major players like AWS, Microsoft, and Google Cloud. Bain estimates that capital spending on cloud facilities will grow by 36% year over year in 2024.
However, these investments are not without challenges, as data centers face electrical grid capacity bottlenecks and a potential shortage of specialized workers. Utilities are already receiving requests from hyperscaler customers to significantly expand electrical capacity over the next five years.