Near-Term Cloud and Enterprise Digestion Persists
REDWOOD CITY, Calif. – December 14, 2023 – 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, worldwide data center capex is forecast to rebound to 11 percent growth in 2024 as select hyperscale cloud service providers return to an expansion cycle and the spending freeze in the enterprise markets thaws.
“Worldwide data center capex is projected for only a 4 percent growth in 2023. The slowdown in general-purpose server and storage deployments weighed down the market despite increased AI-related investments. While Microsoft, Google, and Oracle have increased their data center investments in 2023 year-to-date, other cloud service providers such as Amazon and Meta have trimmed their data center capex,” said Baron Fung, Sr. Research Director at Dell’Oro Group. “Our outlook for 2024 is more optimistic. New AI applications such as generative AI will be a key investment driver in the cloud and enterprise. Furthermore, we anticipate demand for general-purpose servers to recover following a prolonged correction, and as customers make a transition to new server platforms that enable more efficient computing,” explained Fung.
Additional highlights from the 3Q 2023 Data Center IT Capex Quarterly Report:
- Server and storage system revenue is forecast for growth greater than 20 percent in 2024, while network and physical infrastructure revenues grows single digits.
- Dell led all OEMs in server revenue in 3Q 2023, followed by IEI Systems (formerly Inspur) and HPE. White box server vendors gained 8 points of revenue share year-over-year compared to the OEMs.
- The hyperscale cloud service providers are forecast to increase their data center capex by 13 percent in 2024.
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 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 dgsales@delloro.com.
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.
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