According to a Dell'Oro Group report, worldwide DC CapEx is forecast for an 18% compound annual growth rate as investments shift towards AI.
Accelerated computing optimized for AI workloads is expected to account for a quarter of data centre capital expenditures (CapEx), according to the report. Worldwide server unit shipments are forecast to grow 8 % by 2028. Over 20 % of global server deployments in 2028 are forecast to be accelerated. By 2028 the Top four US-based Cloud SPs—Amazon, Google, Meta, and Microsoft—will account for half of global DC 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.”
Dell'Oro Group has made several further key predictions about the data center market that highlight trends and shifts driven by technological advancements and market dynamics. The Group has stated that the data centre physical infrastructure market is not expected to face a recession this year. Instead, they expect revenue growth estimated at some 9% year-over-year for data center physical infrastructure, suggesting considerable resilience in the face of macroeconomic challenges. Another prediction is that a major hyperscale company will undertake a significant deployment (over 10 MW) of immersion cooling technology, indicating growing interest in advanced cooling methods to support high-density computing, especially for AI workloads.
The global data center market is expected to experience significant growth in the next decade, driven by digital transformation across industries, and the increasing need for efficient data storage and processing solutions. Factors affecting data centre CapEx in the next five years are likely to be driven by technological advancements, changing market demands, regulatory requirements, and environmental considerations. AI workloads are expected to drive significant increases in data center CapEx for a variety of reasons. The rise of AI workloads necessitates more specialized processors such as GPUs, TPUs, and FPGAs, which are optimized for AI and machine learning tasks. Incorporating these processors into data centers significantly drives up CapEx due to their high costs. AI applications, particularly those involving large datasets like in machine learning, demand robust and fast storage solutions, pushing the need for investments in advanced storage technologies.
According to Polaris Market Research, the worldwide data center market is poised for robust growth in the coming years. In 2023, the market was valued at USD 253.37 billion and is projected to surge to USD 675.96 billion by 2032, demonstrating a compound annual growth rate (CAGR) of 11.50% from 2024 to 2032.
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