Projected 11% Growth in Data Centre Capex by 2024

Data centre capital expenditure (capex) is expected to experience an 11% growth in 2024, according to a report by Dell'Oro. This growth is attributed to select hyperscale cloud service providers returning to an expansion cycle and the thawing of the spending freeze in the enterprise markets.

"Worldwide data centre capex is projected to only grow by 4% in 2023," says Baron Fung, an analyst at Dell'Oro. "The market was weighed down by a slowdown in general-purpose server and storage deployments, despite increased investments in AI-related technologies. While some cloud service providers like Microsoft, Google, and Oracle have increased their data centre investments this year, others like Amazon and Meta have reduced their capex."

Fung adds, "Our outlook for 2024 is more optimistic. We expect AI applications, such as generative AI, to be a key driver of investment in both the cloud and enterprise sectors. Additionally, we anticipate a recovery in demand for general-purpose servers as customers transition to new server platforms that enable more efficient computing."

The report also forecasts that server and storage system revenue will experience growth of over 20% in 2024, while network and physical infrastructure revenues will grow in the single digits.

In terms of server revenue, Dell led all original equipment manufacturers (OEMs) in the third quarter of 2023, followed by IEI Systems (formerly Inspur) and HPE. White box server vendors also gained 8 points of revenue share compared to the OEMs.

Looking ahead, the report predicts that hyperscale cloud service providers will increase their data centre capex by 13% in 2024.