Gartner warns that the AI bubble could burst. The research firm predicts significant consolidation within the neocloud sector. Revenues will generally fall far short of expectations.
Gartner states that more than $3.5 trillion in AI infrastructure spending could need to be written off by the end of 2030 if providers continue to invest at the current pace.
Research shows that AI providers are expected to spend nearly $1 trillion on infrastructure in 2026, followed by another $6 trillion in planned investments between 2027 and 2030. All told, AI data center owners are projected to generate approximately $8.5 trillion in cumulative revenue through 2030.
However, the research firm expects that revenue from AI applications for businesses and consumers, at current growth rates, will total $3.6 trillion, creating a shortfall of nearly $5 trillion.
This shortfall increases the risk that providers will have to write down the book value of their infrastructure. Gartner estimates that, if current investment trends continue, more than $4 trillion in asset value could be subject to write-downs by 2032. The researchers do not expect the sector to achieve the assumed 12% return on invested capital before the end of that year.
Neoclouds are vulnerable
Network World states that neoclouds are the hardest hit by these trends. Hyperscalers are much more diversified than neocloud companies. They can also sustain massive investments for years to increase their market share.
Gartner predicts that by 2030, more than 80% of neocloud providers will no longer operate independently, as they face rising costs and struggle to differentiate their offerings. This prediction does not necessarily mean that all of the companies involved will go bankrupt. Some could be acquired, merge with competitors, or form partnerships that allow them to continue operating under a different corporate structure.