Data Center Capex and AI Model Investments Explained

Data centers are the backbone of modern computing, housing servers that store and process vast amounts of data. In 2020, the global data center market was valued at $200 billion.

As data centers grow in size and complexity, so do their capital expenditures (Capex). Capex refers to the money spent on physical assets, such as servers, storage systems, and networking equipment. In 2019, server Capex accounted for 45% of total data center Capex.

Artificial intelligence (AI) is increasingly being used in data centers to optimize operations and improve efficiency. AI model investments are a key component of this trend, with many data centers now using AI to predict and prevent equipment failures.

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Global investments in data centers surged 51% year over year in 2024 to $455 billion, according to research published by Dell’Oro Group.

The top 10 hyperscalers accounted for more than half of global data center CapEx in 2024, driven largely by heightened investments in AI infrastructure.

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Dell’Oro Group publishes Data Center IT Capex 5-year forecasts in January and July, offering a complete overview of the market with historical data from 2014 to the present.

Their forecasts provide a comprehensive overview of market and technology trends, including tables covering data center and server capex and server unit shipments forecasts for various customer segments.

The Dell’Oro Group Data Center IT Capex report includes quantitative and qualitative information, and outlook on the market and the top-ten Cloud service providers and the major customer segments.

The report tracks and relies on spending (and volume) on servers (accelerated and general-purpose), which drives the overall spending on data centers and its constitutes such as facilities and networking equipment.

Here is a breakdown of the major technology segments tracked by Dell’Oro Group:

Dell’Oro Group expects infrastructure capital expenditures to grow an additional 30% this year, with the three largest hyperscale providers – AWS, Microsoft, and Google Cloud – pouring tens of billions of dollars into infrastructure to satisfy escalating demand for high-capacity AI compute.

At the current growth rate, Dell’Oro expects capital expenditures to surpass $1 trillion annually by 2029.

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Investing in data centers can lead to significant cost savings, with a study showing that a 1% increase in data center efficiency can result in annual savings of up to $1 million.

By leveraging data center infrastructure, businesses can also improve their disaster recovery capabilities, ensuring minimal downtime and data loss in the event of an outage.

Data center investment can also drive business growth, with a report indicating that 80% of companies believe that a data center will be critical to their business operations in the next three years.

Companies can also reduce their environmental impact by investing in data centers, with a study showing that a data center's carbon footprint can be reduced by up to 90% through the use of renewable energy sources.

Investing in data centers can also provide a competitive edge, with a report stating that 60% of companies believe that a data center will be a key differentiator in their industry.

Data center investment can also lead to increased scalability, allowing businesses to quickly adapt to changing market conditions and customer demands.

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The surge in open-source Chinese AI models is driving record computing investments. This trend is evident in the significant increase in data center capital expenditures (capex) globally.

China's tech giants are leading the charge in AI research and development, with companies like Alibaba and Baidu investing heavily in AI-powered data centers. These investments are expected to reach $10.5 billion by 2025.

The demand for high-performance computing is skyrocketing, with the global data center market projected to grow 15% annually. This growth is largely driven by the increasing adoption of AI and machine learning technologies.

China's data center market is expected to reach $10.5 billion by 2025, with a compound annual growth rate (CAGR) of 15%. This growth is driven by the increasing demand for cloud services and AI-powered applications.

The rise of open-source Chinese AI models is also attracting foreign investment, with companies like Google and Microsoft partnering with Chinese firms to develop AI-powered solutions. These partnerships are expected to drive further growth in the global data center market.

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Data center capex is on the rise, with global investments surging 51% year over year in 2024 to $455 billion. This significant growth is largely driven by heightened investments in AI infrastructure.

The top 10 hyperscalers account for more than half of global data center capital expenditures in 2024, with AWS, Microsoft, and Google Cloud leading the charge. These three largest hyperscale providers are pouring tens of billions of dollars into infrastructure to satisfy escalating demand for high-capacity AI compute.

Here's a breakdown of the top 10 hyperscalers' market share in 2024:

Enterprise investments in data center hardware and infrastructure also saw significant growth, increasing by 25% year over year to $150 billion in 2024. This growth rate is the largest seen since Dell'Oro began tracking the market in 2014.

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Leading providers in the data center industry are investing heavily in capital expenditures, or capex. Industry trailblazers are joining companies to support portfolio growth and data center development.

A key factor driving this investment is the increasing demand for data storage and processing. This demand is fueled by the growing need for cloud services, online applications, and big data analytics.

Leading data center providers are expanding their operations to meet this demand. Industry trailblazers are joining companies to support portfolio growth and data center development.