Global Data Center Capex Expected to Reach $377 Billion by 2026

According to recent research by Dell’Oro Group, worldwide data center capital expenditures will reach $377 billion by 2026, with hyper-scale cloud service providers accounting for more than half of the market value. Increased usage of accelerated computing will provide market growth prospects, according to the latest Data Center IT Capex 5-Year Forecast Report.

“The data center of the future will continue to evolve, with new accelerated computing architectures on the horizon enabling AI applications that are more automated, intelligent, and immersive for end-users,” said Baron Fung, Research Director at Dell’Oro Group. 

“The hyper-scale service providers will lead the market in investing in new accelerated computing technologies, with an emphasis on the cutting-edge server and network architectures, as well as enhanced thermal management solutions,” Fung said.

The Forecast Report also includes the other highlights:

• By 2026, global data center Capex is expected to increase by 13%.
• Adopting new server CPU platforms and faster computing will be the key drivers of data center capital increase.
• Edge computing is expected to account for 8% of total data center infrastructure investment by 2026.

‘Uncertainty’ for Data Center Capex in the Short Term

However, the near-term outlook for data center capital expenditure is subject to several risks and uncertainties, including the potential impact of COVID-19 and ongoing political conflicts in Ukraine on global economic activity.

The current global economic environment presents risks and opportunities for data center capital expenditure growth in 2022 and beyond. In the short term, the outbreak of COVID-19 has created economic uncertainty, which could lead to a decrease in data center capital expenditure in 2022. However, the pandemic is expected to accelerate digital transformation initiatives in the longer term, resulting in increased demand for data center capacity and investment.

Similarly, Ukraine’s ongoing conflict presents risks and opportunities for data center capital expenditure growth. The conflict has led to economic instability in the region, which could decrease data center capital expenditure in the short term. However, in the longer term, the conflict is expected to drive investment in data center capacity as companies look to mitigate the risks of doing business in the region.

However, Dell’Oro Group’s long-term perspective remains “optimistic,” according to Fung. He believes that as organizations embark on digital transformation programs and install new hybrid cloud workloads, cloud service providers and telecom carriers expand their infrastructure to the network edge.

Final Words

Datacenter Capex is expected to continue its upward trend in the coming years, driven by the continued growth of cloud computing and digital transformation initiatives. However, the near-term outlook is subject to risks and uncertainties, including the potential impact of COVID-19 and ongoing political conflicts. Dell’Oro Group’s long-term perspective remains optimistic, as the market is expected to be driven by new workloads and applications requiring enhanced infrastructure investment.

What do you think about the future of data center capex? Let us know in the comments below!

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Reference:

• Dell’Oro Market Research on Data Center IT Capex