AI the catalyst for data centre spending: Dell’Oro

Dell’Oro Group predicts that worldwide data centre capital expenditure (capex) will achieve a compound annual growth rate of 18 per cent over the next five years, as investments shift towards artificial intelligence (AI). The research firm anticipates accelerated computing that is optimized AI workloads will account for a quarter of the data centre capex.

Over 20 per cent of the global server deployments in 2028 are forecast to be accelerated, it said, and by 2028, the top four U.S.-based cloud service providers – Amazon, Google, Meta, and Microsoft – will account for half of global data centre capex.

“Accelerated computing optimized for domain specific workloads such as AI is forecast to exceed US$200 billion by 2028, with the majority of the investments deployed by the hyperscale cloud service providers,” said Baron Fung, senior research director at Dell’Oro Group.

“In order to drive long-term sustainable growth, the cloud service providers will seek to streamline general-purpose computing infrastructure costs by transitioning to next-generation server platforms and rack-scale architectures. We also anticipate increased vertical integration efforts by the hyperscalers to control costs and bring further optimizations for their full stack.”

Meanwhile, said Fung, “the enterprise segment faces near-term headwinds related to economic uncertainties, and will adopt a hybrid cloud model for AI and traditional IT workloads.”

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