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Data Center Capital Expenditure Set to Exceed $1 Trillion by 2029

According to a recent report from the Dell'Oro Group, a leading source for market data in telecommunications and networks, global capital expenditure (capex) for data centers is projected to surpass a staggering $1 trillion by the year 2029. This rise is expected to be fueled by a robust demand for AI infrastructure, despite ongoing efforts directed at sustainability. The report highlights a promising trend for data center investments and posits that AI-related spending will likely maintain its upward trajectory.

Baron Fung, Senior Research Director at the Dell'Oro Group, explains, "We anticipate that within five years, spending on data center infrastructure could greatly surpass $1 trillion annually. Although spending on AI hasn't yet yielded the desired levels of efficiency and returns, the long-term outlook remains optimistic. Factors such as the multi-year capex cycles of hyperscalers and government initiatives, such as the substantial $500 billion Stargate Project, are poised to underpin this growth."

Throughout the forecast, it’s noted that while advancements in AI model training efficiency, particularly from companies like DeepSeek, have introduced disruptions, a variety of innovations are continuously being developed. These innovations aim to improve efficiency and reduce the total cost involved in constructing and operating AI-centric data centers. Currently, significant areas of focus include the enhancement of accelerated computing through GPUs and bespoke accelerators, optimizations for large language models (LLMs), and advancements in rack-scale and network infrastructure. Such developments are essential for fostering sustainable growth from both economic and power usage perspectives.

Key Highlights from the Dell'Oro Report

Some noteworthy takeaways from the Data Center IT Capex 5-Year January 2025 Forecast Report include:

• - A forecasted compound annual growth rate (CAGR) of 21 percent for global data center capex by 2029.
• - Accelerated servers designed for AI training and domain-specific workloads could account for nearly 50% of total data center infrastructure spending by 2029.
• - The top four US-based cloud service providers—Amazon, Google, Meta, and Microsoft—are projected to contribute almost half of the global data center capex in 2025. However, various Tier 2 cloud service providers are also expected to make substantial increases in their capital expenditures in the coming years.

About the Report

The report from Dell'Oro Group features a thorough overview of market conditions, supported by historical data from 2014 to the present. It not only encapsulates technology trends but also includes detailed tables reflecting forecasts for data center and server capex as well as unit shipments specific to various customer segments including the Top 4 US Cloud, Top 4 China Cloud, Top 3 Tier 2 Cloud, and others. Furthermore, it breaks down revenue forecasts for various types of data center infrastructure equipment, incorporating segments for servers, storage systems, and other relevant hardware.

Contact and Further Information

For interested parties looking to explore the report further or make a purchase, you can reach out to the Dell'Oro Group directly at [email protected]. The Dell'Oro Group, known for its expertise in strategic competitive analyses within the telecommunications, networks, and data center IT markets, provides both extensive quantitative data and qualitative assessments to assist businesses in making critical, fact-based decisions. For more insights, they can be contacted at +1.650.622.9400 or via their website at www.delloro.com.