Dell'Oro: AI is the Catalyst for Data Center Spending 18 Percent CAGR Over the Next 5 Years

According to a recent report released by Dell'Oro Group, data center capex is expected to grow at a compound annual growth rate of 18% as investments shift to artificial intelligence. Dell'Oro expects accelerated computing to optimize AI workloads to account for a quarter of data center capex.

Baron Fung, Senior Research Director at Dell’Oro Group said: "Investments in accelerated computing for dome-specific workload optimization, such as AI, are expected to exceed $200 billion by 2028, with the majority coming from hyperscale cloud service providers. To drive long-term sustainable growth, cloud service providers will look to simplify the cost of general-purpose computing infrastructure by transitioning to next-generation server platforms and rack-scale architectures. We also expect hyperscale vendors to increase vertical integration to control costs and bring further optimization to their full stack. At the same time, the enterprise segment faces short-term headwinds related to economic uncertainty and will adopt hybrid cloud models of AI and traditional IT workloads."

Additional highlights from the January 2024 Data Center IT Capex 5-Year Forecast Report:

• Worldwide server unit shipments are forecast to grow 8 percent by 2028.
• Over twenty percent of the global server deployments in 2028 are forecast to be accelerated.
• By 2028 the Top 4 US-based Cloud SPs—Amazon, Google, Meta, and Microsoft—will account for half of global data center capex.