AI is the Catalyst for Data Center Spending as Dell'Oro Predicts an 18 Percent CAGR Over Next 5 Years, According to Dell'Oro Group

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Jan 25, 2024, 08:00 ET

Accelerated Computing to Account for a Quarter of the Data Center Capex Spend

REDWOOD CITY, Calif., Jan. 25, 2024 /PRNewswire/ -- According to a recently published report from Dell'Oro Group, the trusted source for market information about the telecommunications, networks, and data center industries, worldwide data center capex is forecast for a compound annual growth rate of 18 percent as investments shift towards AI. We anticipate accelerated computing that are optimized AI workloads will account for a quarter of the data center capex.

"Accelerated computing optimized for domain specific workloads such as AI is forecast to exceed $200 billion by 2028, with the majority of the investments deployed by the hyperscale cloud service providers," said Baron Fung, Senior Research Director at Dell'Oro Group. "In order to drive long-term sustainable growth, the cloud service providers will seek to streamline general-purpose computing infrastructure costs by transitioning to next-generation server platforms and rack-scale architectures. We also anticipate increased vertical integration efforts by the hyperscalers to control costs and bring further optimizations for their full stack. Meanwhile, the enterprise segment faces near-term headwinds related to economic uncertainties, and will adopt a hybrid cloud model for AI and traditional IT workloads," explained Fung.

Additional highlights from the January 2024 Data Center IT Capex 5-Year Forecast Report:

Worldwide server unit shipments are forecast to grow 8 percent by 2028.
Over twenty percent of the global server deployments in 2028 are forecast to be accelerated.
By 2028 the Top 4 US-based Cloud SPs—Amazon, Google, Meta, and Microsoft—will account for half of global data center capex.

About the Report
The Dell'Oro Group's Data Center IT Capex 5-Year Forecast Report offers a complete overview of the market with historical data from 2014 to the present. The forecasts provide a comprehensive overview of market and technology trends and include tables covering data center and server capex and server unit shipments forecasts for Top 4 US Cloud, Top 4 China Cloud, Top 3 Tier 2 Cloud, Rest-of-Cloud, Telco, and Enterprise customer segments. The report also breakout markets for data center infrastructure equipment, along with server, storage system, and other data center equipment revenues sub-segments. To purchase this report, please contact us at [email protected].

About Dell'Oro Group
Dell'Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, networks, and data center IT markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell'Oro Group at +1.650.622.9400 or visit www.delloro.com.

SOURCE Dell'Oro Group