From Cloud Wars · Dewain Robinson · · 1m 10s
AI infrastructure spending hits $2.59 trillion
Gartner's new forecast shows hardware makers are capturing most of the revenue as compute and memory costs surge.
In brief
Gartner's new forecast shows hardware makers are capturing most of the revenue as compute and memory costs surge. The AI boom's profits are flowing to hardware manufacturers, not software companies, as compute and memory costs skyrocket. Originally reported by Cloud Wars.
AI infrastructure hits $2.59 trillion
Gartner reports companies are investing $2.59 trillion in AI infrastructure capex. Cash flow is struggling to keep pace with these massive expenditures.
Nvidia revenue up 117 percent
Nvidia hit $89 billion in revenue in one quarter, up 117% year over year. Demand far exceeds their ability to produce equipment.
Memory prices surge 400 percent
DRAM prices have jumped 400% since early 2024. Combined with compute costs, hardware manufacturers are capturing most AI revenue.
Trough of disillusionment coming in 2026
Gartner predicts the AI hype cycle will hit its trough in 2026. The market will shift focus to actual return on investment.
Demand may normalize after hype fades
As the hype cycle cools, demand on compute and memory infrastructure could normalize. This may open up new opportunities in the market.
At a glance
The AI boom's profits are flowing to hardware manufacturers, not software companies, as compute and memory costs skyrocket.
