Analysis: Data Center Capex Growth Projections for 2023 and 2024
Experts are predicting a modest 4 percent increase in worldwide data center capital expenditures for the year 2023. Despite a surge in AI-related investments, the market has been hampered by a slowdown in general-purpose server and storage deployments. According to Baron Fung, Sr. Research Director at Dell’Oro Group, major players like Microsoft, Google, and Oracle have ramped up their data center investments this year. However, cloud service providers such as Amazon and Meta have scaled back their capital expenditures in this sector.
Fung remains optimistic about the outlook for 2024, citing the emergence of new AI applications like generative AI as a key driver for investment in both cloud and enterprise sectors. Additionally, there is an anticipated recovery in demand for general-purpose servers as customers transition to more efficient computing platforms.
Key Insights from the 3Q 2023 Data Center IT Capex Quarterly Report:
- Server and storage system revenues are expected to grow by over 20 percent in 2024, while network and physical infrastructure revenues will see single-digit growth.
- In the third quarter of 2023, Dell led all OEMs in server revenue, followed by IEI Systems (formerly Inspur) and HPE. White box server vendors saw an 8-point increase in revenue share compared to OEMs.
- Hyperscale cloud service providers are projected to boost their data center capital expenditures by 13 percent in 2024.
Overall, the data center landscape is poised for growth in the coming years, driven by advancements in AI technology and the increasing demand for more efficient computing solutions. As major players in the industry continue to invest in data center infrastructure, we can expect to see a shift towards innovative applications and improved server platforms that will shape the future of data center operations.
