Dell’Oro Group predict AI will help increase data centre capex to over $500bn by 2027

Dell’Oro Group predict AI will help increase data centre capex to over $500bn by 2027

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The ten largest cloud service providers spent $114 billion on data centre infrastructure in 2022.

A report published by Dell’Oro Group last week has predicted that worldwide data centre capex is forecast to grow 15 percent by 2027, pushing it over the half-a-trillion dollar mark in the next four years.

Over 20 percent of global server deployments in 2027 may be accelerated, but the report also predicted near-term cloud and enterprise capex growth will decelerate as the market undergoes digestion.

The Data Center IT Capex 5-Year Forecast Report uses data from 2014 up to the present day to provide an overview of the whole Data Centre market.

Dell’Oro also track the ten largest cloud service providers, which between them spent $114 billion on data centre infrastructure in 2022.

Dell’Oro said the breakout of Capex related to data centre consumes the largest share of Cloud service provider spending and is therefore an important measure to watch each quarter. A fluctuation by any of these companies will cause a major ripple through the entire supply chain.

The report covers Alibaba, Amazon, Apple, Baidu, Meta, Google, IBM Cloud, Microsoft, Oracle and Tencent.

“Despite near-term data centre capex growth headwinds as the major cloud service providers and enterprises optimize their infrastructure, forthcoming technology transitions will stimulate long-term growth,” said Baron Fung, senior research director at Dell’Oro Group.

“Most notably, the hyperscale cloud service providers will prioritize their investments toward accelerated systems for AI applications for both their public cloud platform and SaaS offerings.”

“We will see continuous optimisation across the entire data centre stack, with the deployment of next-generation servers featuring high-core counts and deeper memory that are attached to next-generation networks. Meanwhile, the rest of the market will invest in accelerated systems more selectively, with most enterprises adopting a hybrid cloud strategy,” explained Fung.

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