Dive Brief:
- According to Dell’Oro Group, major technology companies are poised to invest more than $180 billion in data center expansions and related infrastructure costs. The market research firm shared its analysis of data center capital expenditures with CIO Dive ahead of a December report.
- Amazon, Google, Meta and Microsoft together increased infrastructure investments by 81% year-over-year in the third quarter of 2024, the firm estimated.
- The construction boom was driven by training in AI models, the main focus of data center investments this year, said Dell’Oro Group senior research director Baron Fung . AWS, Azure and Google Cloud reported big year-over-year spikes in AI capital spending and revenue in the third quarter and forecast more of the same in the coming months.
Diving knowledge:
Cloud providers invested in AI-optimized infrastructure to supply compute to model builders and prepare for an even bigger wave of processing demand. The three largest public cloud providers (AWS, Azure and Google Cloud) accounted for roughly 80% of spending in the third quarter, Dell’Oro Group found.
While AI chipmaker Nvidia nearly doubled year-over-year revenue in the three-month period ended Oct. 27, the traditional central processing market has also recovered Revenues from CPU, memory and storage suppliers rose more than 90% in the third quarter, marking the fourth consecutive quarter of double-digit growth, according to Dell’Oro Group.
Enterprise AI adoption remains in the early stages, but as use cases grow, the research firm expects AI-focused servers to account for a quarter of server revenue in the next months, Fung said in an email.
The data center components industry enjoyed record returns in the second quarter, with server revenue up 127% year over year to $54 billion, according to a September Dell’Oro Group report. Hyperscale hunger for graphics processing units, coupled with pent-up demand for server CPUs, fueled unprecedented growth.
“General-purpose computing and storage are recovering, especially at Amazon and Microsoft, as they expand capacity to meet growing demands for cloud services,” Fung said.
As artificial intelligence spreads across the technology sector, network equipment and liquid cooling solutions to support inference and tuning operations will be the next segments where investments increase.
“Investments are increasing in specialized networks to interconnect AI clusters,” Fung said.
