More than $3,5-trillion of AI infrastructure spending could be exposed to impairment by the end of 2030, if AI providers continue their current pace of capital spending, according to Gartner.
“In 2026, AI providers are expected to spend nearly $1-trillion on AI infrastructure, and are forecast to invest an additional $6 trillion between 2027 and 2030,” says Will Sommer, senior director analyst at Gartner. “However, our research indicates that enterprise and consumer AI revenue will be insufficient to support profitable returns on all planned AI capital expenditures during this period.”
“Through 2030, AI data centre owners would need to generate a cumulative $8,5-trillion in revenue to cover announced capital spending, financing costs, and a 12% return on invested capital (ROIC), which we assume to be the hurdle rate of investment capital,” says Sommer.
“However, total enterprise and consumer AI revenue that can be attributed to AI data centers during this period is forecast to reach no more than $3,6-trillion. Because most AI-native providers operate asset-light business models, we predict that less than half of AI revenue will be earned by providers that own significant AI infrastructure.”
Failure to achieve sustainable ROIC on rapidly depreciating assets would almost certainly necessitate write-downs. Based on Gartner projections, a continued AI infrastructure investment trajectory could leave more than $4 trillion in asset value exposed to write-down risk through 2032. In this scenario, Gartner does not expect the 12% ROIC to be achieved until the end of 2032 at earliest.
By 2030, Gartner predicts that cost pressure and a lack of a differentiating business model will force over 80% of neocloud providers to cease independent operations.
Neocloud market to consolidate by 2030
Neoclouds will be among the most exposed to the imbalance between revenue and capital spending. Hyperscalers, for example, have massive and highly diversified revenue sources that could plausibly sustain AI investments for years.
On the other hand, neoclouds must soon earn returns on AI-optimised IaaS and associated platforms to sustain operations.
Gartner estimates AI-optimised IaaS spending will grow from $66-billion in 2027 to $174-billion in 2030.
“The growth in spending on AI-optimised IaaS will be too low for most AI compute providers to recover their AI investments before the current generation of AI semiconductors is replaced,” says Sommer.
By 2030, Gartner predicts that cost pressure and a lack of a differentiating business model will force over 80% of neocloud providers to cease independent operations.