Dell'Oro: AI growth will drive data center capex to $500bn by 2027
Aug 01, 2023 | Posted by Abdul-Rahman Oladimeji
The analyst firm Dell'Oro Group forecasts that data center capital expenditures will surpass $500 billion by 2027 due to AI infrastructure expenditures. As the market undergoes digestion, the group predicts that cloud and enterprise expenditure growth will decelerate in the near future.
Despite short-term headwinds in data center capex growth as the major cloud service providers and businesses optimize their infrastructure, Baron Fung, senior research director at Dell'Oro Group, predicted that upcoming technological changes will spur long-term growth. The hyperscale cloud service providers will prioritize their investments in advanced systems for AI applications for both their public cloud platform and SaaS offerings, according to Fung.
Dell'Oro predicts worldwide data center capital expenditures will increase by 15% by 2027, while more than 20% of global server deployments in that year will include AI acceleration. TD Cowen reported last week that approximately 2.1 GW of data center leases were signed in just 90 days due to AI requirements. The analysts predicted a record year for data center leasing in North America.