Pure Storage: Cloud, AI, and Energy Efficiency

But which trends are mere flashes in the pan, and which developments will shape the economy and technology sector in the long term?

2025: Stricter Selection of AI Projects as the Bubble Begins to Burst

Next year, companies will become more selective about their AI investments. The boom in generative AI, fueled by the release of tools like ChatGPT over the past two years, is expected to slow as businesses reassess their spending. A wave of realism is likely to set in as some projects fail to deliver expected returns, forcing companies to scale back before investor fatigue takes hold.

The market is predicted to realign, with growth becoming unsustainable for projects that fail to prove their value. Many organizations may struggle to justify further investment in AI or generative AI if existing initiatives have not delivered tangible benefits. While FOMO (fear of missing out) has been a major driver of investment, it is anticipated to lose its influence in 2025.

Non-customized AI solutions are expected to lose favor. Instead, Retrieval-Augmented Generation (RAG) will emerge as a critical method for implementing AI in organizations. RAG’s ability to provide a standardized approach to customization—enhancing results and minimizing hallucinations—will make it indispensable. Business leaders, under pressure to show returns on previous speculative AI investments, will see RAG as essential, especially compared to building, training, and optimising individual models from scratch.

AI and the Rising Wave of Data Centers Threaten Sustainability Goals

The growing demand for AI and the resulting need for expanded data storage are bringing sustainability back into focus. While the surge in computing resources driven by AI temporarily sidelined energy-saving initiatives, sustainability is once again climbing the corporate agenda. Companies are rethinking how they view and implement sustainable practices, with senior management giving these issues renewed attention.

This shift could result in several challenges:

• More companies will need to discuss how they plan to meet the rising energy demands of data centers. With some of the world’s largest firms turning to nuclear power to address this demand, these decisions are likely to face increasing scrutiny.

• Sustainability metrics will become a key focus at the executive level. By emphasizing the financial implications of environmental challenges, impact accounting will become a standard tool for highlighting the benefits of sustainability initiatives in terms that resonate with senior management and boards. 

• A Surge in Data Center Construction:
  Many countries may see a rise in data center construction, driven partly by new government policies enforcing sovereign cloud mandates. However, this raises pressing questions: How will these facilities be powered? Can sustainability targets be met without compromising power availability for homes and businesses?

Has Cloud Demand Peaked?

Realist arguments are increasingly overshadowing the once-dominant narratives of cloud adoption. With growing regulatory expectations, heightened awareness of its drawbacks, escalating costs driving repatriation, and geographical restrictions, 2025 could mark the year when cloud demand peaks.

The implementation of the Digital Operational Resilience Act (DORA) in spring 2025 will shift attention to the actions of cloud service providers. These providers will be required to demonstrate their compliance through resilience tests and detailed plans submitted to regulatory authorities. For the first time, cloud service providers and hyperscalers will face a level of accountability previously unseen, particularly in the financial services sector. Non-compliance is expected to trigger significant consequences, with some providers likely made into examples to ensure stricter adherence to the regulations. This increased regulatory oversight could reshape the landscape for cloud service providers.

Another factor driving change is the ongoing disruption caused by Broadcom’s acquisition of VMware. In 2025, the market will determine whether customers resign themselves to Broadcom’s terms or embrace alternative solutions. Many companies are still navigating their options, assessing what works and what doesn’t among the alternatives currently available. The coming year will reveal whether these alternatives can fully meet companies’ needs or whether initial resistance will give way to a reluctant return to the status quo. Simultaneously, some companies are using this period of uncertainty to modernize their applications, adopting containerized solutions that can run on any cloud—be it private or public.