2023 Hyperscale Capex Forecast Declines to 5 Percent Growth
REDWOOD CITY, Calif. – June 15, 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, global data center capex decelerated to 8 percent year-over-year (Y/Y) growth in 1Q 2023 with softness emerging in the enterprise IT market, and with some of the hyperscalers entering a capex digestion cycle.
“While data center capex growth for the hyperscalers will decline significantly this year, we project some of the cloud service providers such as Microsoft and Google will continue to increase spending by double digits,” said Baron Fung, Senior Research Director at Dell’Oro Group. “Meanwhile, the beginning of the year witnessed a slow start in enterprise IT spending, with revenues for the server and storage OEMs down Y/Y. We anticipate that the demand will continue to deteriorate throughout the first half of 2023. The lower demand environment will have an impact of slowing systems pricing growth, which could prompt customers waiting on the sidelines to resume spending later this year. In addition, the recent server platform refresh from Intel and AMD, and the growing demand on AI/ML applications, is expected to motivate customers to upgrade their infrastructure,” explained Fung.
Additional highlights from the 1Q 2023 Data Center IT Capex Quarterly Report:
- Server and storage systems revenue forecast declines to 3 percent growth in 2023, while network and physical infrastructure maintain double-digit revenue growth.
- Server shipments for server OEMs were down 20 percent Y/Y in 1Q 2023, while white box server vendors were up more than 20 percent.
- Top 4 US Cloud service providers on track to launch services in 14 new regions in 2023, a significant decrease from the 28 regions launched in 2022.
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.
# # #
