Global data centre capex slowed to eight per cent year-over-year (Y/Y) growth in Q1 2023, according to a recent report from the Dell’Oro Group, with softness emerging in the enterprise IT market, and with some of the hyperscalers entering what Dell’Oro calls a “capex digestion cycle.”
Server and storage revenue growth is forecast to fall to three per cent, while network and physical infrastructure revenue growth will remain in double-digits.
“While data centre capex for the hyperscalers will decline significantly this year, we project some of the cloud service providers such as Microsoft and Google will continue to increase spending by double digits,” said Baron Fung, senior research director at Dell’Oro Group.
“Meanwhile, the beginning of the year witnessed a slow start in enterprise IT spending, with revenues for the server and storage OEMs down Y/Y. We anticipate that the demand will continue to deteriorate throughout the first half of 2023.
“The lower demand environment will have an impact of slowing systems pricing growth, which could prompt customers waiting on the sidelines to resume spending later this year. In addition, the recent server platform refresh from Intel and AMD, and the growing demand on AI/ML applications, is expected to motivate customers to upgrade their infrastructure.”