Amazon, Meta, and enterprise spend to drive data centre growth

According to a recently published report by Dell’Oro Group, worldwide data center capex is forecast to rebound to 11 percent growth in 2024 as select hyperscale cloud service providers return to an expansion cycle and the spending freeze in the enterprise markets thaws.

“Worldwide data center capex is projected for only a 4 percent growth in 2023. The slowdown in general-purpose server and storage deployments weighed down the market despite increased AI-related investments. While Microsoft, Google, and Oracle have increased their data center investments in 2023 year-to-date, other cloud service providers such as Amazon and Meta have trimmed their data center capex,” said Baron Fung, Sr. Research Director at Dell’Oro Group. “Our outlook for 2024 is more optimistic. New AI applications such as generative AI will be a key investment driver in the cloud and enterprise. Furthermore, we anticipate demand for general-purpose servers to recover following a prolonged correction, and as customers make a transition to new server platforms that enable more efficient computing,” explained Fung.

Additional highlights from the 3Q 2023 Data Center IT Capex Quarterly Report:

• Server and storage system revenue is forecast for growth greater than 20 percent in 2024, while network and physical infrastructure revenues grows single digits.

• Dell led all OEMs in server revenue in 3Q 2023, followed by IEI Systems (formerly Inspur) and HPE. White box server vendors gained 8 points of revenue share year-over-year compared to the OEMs.

• The hyperscale cloud service providers are forecast to increase their data center capex by 13 percent in 2024.

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