According to the latest market report from research firms Dell'Oro and Omdia, global capital expenditures (Capex) in data centers are expected to grow by 11% in 2024. This growth is attributed to the re-expansion of some hyperscale data centers and the resumption of enterprise data center construction that was initially frozen.
Baron Fung, Senior Research Director at Dell'Oro, noted that the Capex growth for global data centers in 2023 is estimated at only 4%. The increase in AI-related investments hasn't fully offset the decline caused by reduced investments in general servers and storage devices. Throughout 2023, Microsoft, Google, and Oracle increased their respective data center investments, while Amazon and Meta cut down on data center investments. Their predictions for 2024 are more optimistic, anticipating new AI applications like generative AI to drive significant investments in the cloud and enterprise network domains.
Other notable insights from the report include:
- Predicted revenue growth of over 20% for servers and storage systems in 2024, with single-digit percentage growth in the sales of networks and physical architectures.
- Major hyperscale cloud data center operators are expected to increase investments by 13% next year.
Analysts express optimism for 2024, with AI being a crucial driving force behind this positive outlook. Among Omdia's 11 identified trends, five are related to AI. As AI continues to permeate human life, analysts have reasons to be upbeat. Dell'Oro and Omdia's logic behind the forecast lies in AI's potential to introduce more applications, propelling growth in the data center sector. However, questions remain about which specific AI applications will contribute to this anticipated growth.