Cloud infrastructure spending surges 14.9% in Q1

MASSACHUSETTS, UNITED STATES — Despite mounting economic pressures and soaring prices, cloud infrastructure spending experienced a substantial surge in the first quarter of 2023, according to a report by the International Data Corporation (IDC).

Year-over-year expenditure on compute and storage infrastructure products for cloud deployments ascended by 14.9%, hitting $21.5 billion, outperforming the non-cloud sector, which recorded a 0.9% drop to $13.8 billion.

IDC’s report highlighted an 11.4% fall in unit demand, but average selling prices skyrocketed by 29.7%. The IDC attributed this increase to inflationary pressures and a rise in GPU-accelerated systems deployed by cloud service providers.

Spending on shared cloud infrastructure saw a significant year-over-year rise of 22.5%, reaching $15.7 billion. Conversely, dedicated cloud infrastructure spending fell by 1.5% to $5.8 billion.

Looking ahead to the rest of 2023, IDC anticipates a 7.3% growth in total cloud infrastructure spending, reaching $96.4 billion. However, non-cloud infrastructure spending is forecasted to decline by 6.3% to $60.4 billion.

“Cloud infrastructure spending remains resilient in the face of macroeconomic challenges,” said Kuba Stolarski, Research VP for IDC’s Infrastructure Systems, Platforms, and Technologies Group. 

However, he also cautioned about significant price hikes and potential demand stagnation as possible hindrances to growth throughout the year.

On a regional level, cloud infrastructure spending increased in all areas, barring Central & Eastern Europe, China, and Canada. 

By 2027, IDC predicts cloud infrastructure spending will reach $153.0 billion, making up 69% of total compute and storage infrastructure spending.