Heat waves can even make markets sizzle. This week we discuss which data infrastructure providers are blazing a trail.
The median size of datasets required to train AI models increased from 5.9 million datapoints in 2010 to 750 billion in 2023.
As demand rises for AI-enabled offerings, companies are prioritizing tools to integrate, store, and process data. BofA’s Software team estimates that the data infrastructure industry (e.g., data warehouses, data lakes, unstructured databases, etc.) is a $96 billion market that could reach $153 billion in 2028. The team’s proprietary survey revealed that data infrastructure is 35% of total IT spending with budgets expected to grow 9% over the next 12 months. Hyperscalers including mega-cap tech are among the top recipients of dollars and in-turn, those companies spend big on hardware. Senior Internet Analyst Justin Post expects server and equipment capex for mega-cap internet companies to rise 43%y/y (year over year) in 2024, to represent $27 billion of the $37 billion y/y total capex growth. Despite the spending surge, Justin thinks these companies will keep free cash flow margins stable at 22%y/y before increasing in 2025.
Must Read Research will return July 8th. Happy Independence Day.
