#United States #Redwood City #Dell'Oro Group #cloud providers #Blackwell GPU

Hyperscale Investments Power Data Center Capital Expenditures Growth

According to a newly released report by the Dell'Oro Group, the data center capital expenditures (capex) skyrocketed by 53% year-over-year in the first quarter of 2025. This notable surge is attributed primarily to increasing investments from hyperscale cloud service providers, particularly those deploying AI infrastructure leveraging NVIDIA's Blackwell GPUs and custom accelerators.

A Continued Surge in Investment

The report highlights that this increase marks the sixth consecutive quarter of double-digit annual growth, showcasing a resilient market that continues to thrive despite global economic challenges such as tariff uncertainties. Baron Fung, Senior Research Director at Dell'Oro Group, emphasized that the burgeoning demand for AI infrastructure is propelling capex within the hyperscale segment.

Fung commented, "The demand for NVIDIA Blackwell-based servers and custom accelerators is significant, as the top four cloud service providers in the United States escalate their capex as part of a multi-year investment strategy. Notably, tariff-related risks do not appear poised to disrupt these hyperscalers' spending plans, as they have diversified their global supply chains to mitigate such challenges."

While some U.S. cloud service projects faced cancellations, the overarching trend remains positive, with hyperscalers opting to adjust capacities rather than curtail investments altogether. On the flip side, enterprises are exercising a more cautious approach in light of budget constraints and trade-related risks, leading to slight downward revisions in their capex forecasts. However, it is worth noting that the Tier 2 cloud segment, particularly driven by emerging GPU-as-a-Service (GPUaaS) providers, is expected to experience the most substantial growth trajectory in 2025.

Expected Trends in Data Center Capex

Looking ahead, the report projects a robust 30% growth in overall global data center expenditures for 2025, predominantly fueled by sustained demand for AI infrastructure and a broad recovery in general-purpose infrastructure for servers and networking. The report predicts that high-end accelerated servers will constitute more than one-third of the total capex in the upcoming year.

Among original equipment manufacturers (OEMs), Dell emerged as the leader in server revenue share during Q1 2025, followed by HPE and IEIT Systems. The substantial demand for AI servers significantly benefitted these OEMs, although shipments of the NVIDIA NVL72 platform remain constrained outside the hyperscale market. Notably, white-box vendors claimed over 60% of the server market, riding on the back of strong hyperscale AI server deployments, especially those utilizing the NVL72 platform.

Conclusion

The Dell'Oro Group's Data Center IT Capex Quarterly Report provides vital insights into the capital expenditures across the industry, tracking financial allocations related to the ten largest cloud service providers, enterprise customers, telecoms, and more. The report also delves into forecasts and market trends shaping the growth of the cloud sector.

To purchase the complete report and gain further insights on market dynamics, potential investments, and future trends, interested parties can reach out to the Dell'Oro Group for detailed information.

For inquiries, potential investors can contact Dell'Oro Group at +1.650.622.9400 or visit their official website at www.delloro.com.