A recent report from the Dell’Oro Group reveals a significant increase in capital expenditures (capexCAPEX, short for Capital Expenditure…) in hyperscale data centers, reaching an 82% growth in the third quarter of 2024. This increase is directly related to investments in Artificial Intelligence (AI) infrastructure. Additionally, the general-purpose server and storage markets have shown signs of recovery, recording double-digit revenue growth for three consecutive quarters.
According to Baron Fung, research director at the Dell’Oro Group, “accelerated servers, primarily designed for AI training workloads, constitute the majority of spending by U.S. and Chinese hyperscalers so far this year.” Fung emphasized that NVIDIA’s GPU systems have dominated the market, although U.S. providers are betting on customized architectures to optimize their workloads and reduce capital (capex) and operational (opex) costs.
Key Trends and Future Outlook
The report highlights several key points from the third quarter of 2024:
- Global increase in capex for data centers: A 44% increase in capital expenditures for data center infrastructure is expected in 2024, driven by both the growing demand for AI-related solutions and non-AI-related infrastructure.
- Dell’s dominance in server revenue: Dell led among original equipment manufacturers (OEMs) in server revenue, with IEIT Systems and HPE taking second and third places, respectively. Accelerated servers accounted for 40% of OEM revenue during the quarter.
- Growth in white-box servers: White-box server providers captured over 60% of revenue in the accelerated server market, responding to strong demand from hyperscalers.
- Projections for 2025: Although investments in AI are expected to remain a key growth driver, the growth of capex in data centers is anticipated to moderate in 2025, as some cloud service providers temporarily pause their expansions.
Adoption of accelerated computing beyond hyperscalers
Accelerated computing is also gaining traction outside the hyperscale market. Spending in this segment has doubled compared to the same period last year, underscoring its growing importance in the global technology landscape.
About Dell’Oro Group
The Dell’Oro Group, specializing in market analysis in telecommunications, security, and data centers, publishes detailed reports that offer quantitative data and qualitative analysis. Its quarterly report on capex in data centers outlines market trends and projections for major cloud service providers and other segments such as enterprise and telecommunications.
This report reinforces the relevance of AI as a key engine for growth in the technology sector, as companies seek to optimize their infrastructure to meet increasing market demands.