Ongoing investments in AI infrastructure fueled a 82 percent increase in hyperscale data center capex in 3Q 2024, according to a new report from Dell’Oro Group. Additionally, the general-purpose server and storage markets have been recovering, achieving double-digit revenue growth for the past three consecutive quarters.
“Accelerated servers, mainly targeted for AI training workloads, have accounted for the majority of the spending among the US and Chinese hyperscalers year-to-date,” said Baron Fung, Sr. Research Director at Dell’Oro Group. “While NVIDIA GPU systems have been the dominant solution, especially for broader cloud and enterprise deployments, the US hyperscalers are becoming more vertically integrated, increasing their usage of AI servers with custom accelerators. These custom architectures, which are optimized for each cloud service provider’s workloads, can realize significant capex savings, and opex savings, in terms of providing increased efficiencies. Meanwhile, adoption of accelerated computing for the non-hyperscale market is also gaining traction, with spending more than doubling compared to the year-ago period,” explained Fung.
Additional highlights from the 3Q 2024 Data Center IT Capex Quarterly Report:
- Global data center capital expenditures are expected to rise by 44 percent in 2024, fueled by sustained demand for both AI and non-AI infrastructure investments.
- Dell topped all OEMs in server revenue for 3Q 2024, with IEIT Systems and HPE trailing closely behind. Accelerated servers made up an estimated 40 percent of OEM server revenue for the quarter. White-box server vendors dominated the accelerated server market, capturing over 60 percent of revenue share to meet robust hyperscale demand.
- AI investments will remain a key growth driver, though data center capex growth in 2025 is expected to moderate as some hyperscale cloud service providers temporarily pause their expansion efforts.
