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, hyperscale data center capex is on track for 28 percent growth 2022. However, we expect the cloud service providers will enter a digestion cycle in 2023.
“Data center capex has grown double-digits for the fifth consecutive quarter, led by the US hyperscalers’ investments in new data center footprints,” said Baron Fung, Research Director at Dell’Oro Group. “With supply improvements in the recent quarter, vendors were able to reduce backlog significantly in the rest of cloud and enterprise markets. However, we anticipate growth headwinds ahead, as the hyperscalers wind down on their expansion cycle, and enterprises tighten IT capital spending in light of an uncertain business climate,” explained Fung.
Additional highlights from the 3Q 2022 Data Center IT Capex Quarterly Report:
- China cloud and enterprise data center markets are undergoing deep spending cuts.
- Upcoming server architectural changes will drive long-term data center investments.
- Data center capex growth is projected to grow single digits in 2023.