Hyperscale Capex Surges 82 Percent in 3Q 2024, Fueled by AI Infrastructure Spending, According to Dell'Oro Group

General Purpose Servers and Storage Staging a Recovery

REDWOOD CITY, Calif. , Dec. 18, 2024 /PRNewswire/ -- According to a recently published report by Dell'Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, ongoing investments in AI infrastructure fueled an 82 percent increase in hyperscale data center capex in 3Q 2024. Additionally, the general-purpose server and storage markets have been recovering, achieving double-digit revenue growth for the past three consecutive quarters.

"Accelerated servers, mainly targeted for AI training workloads, have accounted for the majority of the spending among the US and Chinese hyperscalers year-to-date," said Baron Fung, Sr. Research Director at Dell'Oro Group. "While NVIDIA GPU systems have been the dominant solution, especially for broader cloud and enterprise deployments, the US hyperscalers are becoming more vertically integrated, increasing their usage of AI servers with custom accelerators. These custom architectures, which are optimized for each cloud service provider's workloads, can realize significant capex savings, and opex savings, in terms of providing increased efficiencies. Meanwhile, adoption of accelerated computing for the non-hyperscale market is also gaining traction, with spending more than doubling compared to the year-ago period," explained Fung.

Additional highlights from the 3Q 2024 Data Center IT Capex Quarterly Report:

• Global data center capital expenditures are expected to rise by 44 percent in 2024, fueled by sustained demand for both AI and non-AI infrastructure investments.
• Dell topped all OEMs in server revenue for 3Q 2024, with IEIT Systems and HPE trailing closely behind. Accelerated servers made up an estimated 40 percent of OEM server revenue for the quarter. White-box server vendors dominated the accelerated server market, capturing over 60 percent of revenue share to meet robust hyperscale demand.
• AI investments will remain a key growth driver, though data center capex growth in 2025 is expected to moderate as some hyperscale cloud service providers temporarily pause their expansion efforts.

About the Report
Dell'Oro Group's Data Center IT Capex Quarterly Report details the data center infrastructure capital expenditures of each of the ten largest Cloud service providers, as well as the Rest-of-Cloud, Telco, and Enterprise customer segments. Allocation of the data center infrastructure capex for general-purpose and accelerated servers, storage systems, and other auxiliary data center equipment is provided. The report also discusses market trends, drivers of the leading Cloud service providers' capex growth during the quarter, and the outlook for the next year. 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, security, enterprise networks infrastructure, and data center 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