Source:
The RegisterHistory's biggest infrastructure build-out is pushing up hardware and software prices, analyst says
Spending on AI infrastructure is pushing tech sector expenditure to historic levels, and enterprise customers are already footing the bill through higher software and hardware prices. John-David Lovelock, Distinguished VP Analyst at Gartner, told The Register that tech companies' own technology spending already amounted to around $1 trillion and was set to grow by 34.7 percent in 2026. The colossal splurge is driving global sales, leading Gartner to raise its 2026 estimates to $6.37 trillion, a surge of 14.2 percent year-on-year. That's up from April's forecast of $6.31 trillion and February's $6.15 trillion. Lovelock said overall growth was accelerating, although tech spending was moving at three different speeds. Devices, which include consumer purchases as well as business laptops, are set to grow by 9.8 percent. However, a significant chunk of that increase comes from higher prices as memory and chips become more expensive. Services and telecoms had lower growth, at 5.3 percent and 4.4 percent respectively. Infrastructure as a service – one segment of cloud computing – is on pace to grow by 29.3 percent this year to reach $287 billion. In 2025, the market grew by 25.3 percent, Gartner said. Much of the acceleration is being driven by technology companies equipping datacenters to provide capacity for the expected AI boom. Gartner's spending figures exclude the buildings themselves and their cooling systems. Lovelock told us: "The AI infrastructure build-out is the largest infrastructure project humanity has ever undertaken. Bigger than the US highways, bigger than European rail, bigger than the Great Wall of China, and the International Space Station combined. "That's how big this sucker is. It is transformational in that sense. We are shifting from a world where we spend on information technology to a world where we're going to spend on intelligence technology. And right now, you can have your head in the sand and try and avoid that reality, but it's coming." As enterprise software companies embed AI into their products and partner with
foundation modelbuilders such asOpenAIandAnthropic, organizations buying IT are concerned about price increases. "CIOs are extremely concerned about price increases coming at them from all of their vendors, and they are pushing back hard in every area where they can. But the only place that they're being successful is in the IT services area, where when a service provider adds AI to their product offering, the service provider is rewarded with a lower price point from their customers," Lovelock said. There were also unanswered questions about whether the market can sustain the increases, or whether higher prices are a defensive move by vendors trying to protect their market share. For example, by adding AI modelGeminito a search engine, it could be argued Google is defending its dominant position in the market from the threat of AI, as opposed to gaining new revenue. There is also the problem of users trying to manage AI costs in response to price increases from model builders, several of whom have switched from capped subscription to usage-based billing. Lower-cost models are coming onto the market from China, while developers are looking to use open source models where appropriate to curb their use of proprietary foundation models. Whether the price crunch will leave the tech industry able to continue paying for its AI infrastructure building program is "the big open question," Lovelock said. "But it's not being investigated well or answered incredibly well." ®Get AI news in your inbox
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Key Terms Explained #
Anthropic
An AI safety company founded in 2021 by former OpenAI researchers, including Dario and Daniela Amodei.
Foundation Model
A large AI model trained on broad data that can be adapted for many different tasks.
Gemini
Google's flagship multimodal AI model family, developed by Google DeepMind.
OpenAI
The AI company behind ChatGPT, GPT-4, DALL-E, and Whisper.