AWS, Microsoft Azure, and Google Cloud account for almost half of future investment.
The Dell’Oro Group has published the “Data Center IT Capex 5-Year Forecast Report”. The statistical analysis predicts that the big three of AWS, Microsoft Azure, and Google Cloud will account for more than half of this amount.
As forecasted by Dell’Oro, these investments are significant for commercial server, rack, security, and cabling companies. On the other hand, many other companies benefit, including property rental companies, heating, and cooling suppliers, etc.
Other data center providers are not excluded from these future opportunities.
According to Dell’Oro, the leading investment drivers for data centers will be based on new server CPUs and accelerated computing platforms. New single processors will advance work on AI and data analysis.
According to Baron Fung, research director at Dell’Oro: “The data center of the future continues to evolve. Innovative accelerated computing architectures will enhance AI applications, and this means automation, intelligence, and a more immersive customer experience.”
Despite these predictions, “hyperscalers” as we call them, face the same pitfalls as other businesses. Indeed, the impacts of the health crisis are still being felt. Added to this is the ongoing Ukraine-Russia conflict, disrupting the geopolitical situation.
“Between supply chain issues, global inflation, and the effects of the worldwide economy, there is uncertainty in the data center market in the short term.
Three factors that support Dell’Oro’s optimistic forecast
In the long term, Dell’Oro’s forecast remains positive. This is for three particular reasons.
- Firstly, businesses’ ongoing digital transformation continues to be a driver for cloud computing adoption.
- Secondly, the increase in hybrid cloud workloads. Companies leverage the hybrid strategy to optimize storage inside and outside their infrastructures.
- Finally, edge computing, which is expanding, will account for 8% of data center investments within three years. The latter focuses on reducing latency and data processing times. Improvements streamline workloads and allow information to be updated automatically within organizations.
Data centers get attention, and cloud computing usage is at its peak.
Investment in data centers has been on the rise since the second half of 2022. According to Synergy Research, 24 billion dollars have been poured into them. Cloud computing will soon reach a milestone: allocating 18.3 billion dollars for cloud and hosting infrastructure. Synergy Research agrees with Dell’Oro’s vision. Indeed, data centers are seeing increasing demand from cloud computing and the ongoing digital transformation.
