Don’t expect double-digit data center capex growth in 2023: Dell’Oro

March 21, 2023

That said, anticipated server architectural changes and accelerated computing will spur long-term data center investments, Dell’Oro believes.

Stephen Hardy

Worldwide data center capex grew 15% to $241 billion in 2022, according to Dell’Oro Group. However, the market research firm states in its latest Data Center IT Capex Quarterly Report that the market won’t see a repeat of such strong performance this year.

Dell’Oro analysts expect that cloud and enterprise data center spending growth will shrink to single digits in 2023. “The hyperscale cloud service providers have undergone a robust expansion cycle for three straight years while navigating through a supply constraint environment,” explained Baron Fung, senior research director at Dell’Oro. “Enterprises also increased their IT spending from digital transformation initiatives. However, the market is due for a pullback as the hyperscalers are at the end of their expansion cycle and seek to improve efficiencies, and the enterprises will scrutinize expenditures more carefully in an uncertain economic environment. Thus, shifting from a supply-constrained environment to one that is oversupplied as demand softens in certain sectors.”

That said, anticipated server architectural changes and accelerated computing will spur long-term data center investments, Dell’Oro believes.

Looking back, Dell’Oro estimates the Top 10 cloud service providers accounted for 48% data center capex worldwide last year. The server vendors who benefited the most included market share leader Dell, followed by HPE and Inspur.

Dell’Oro’s Data Center IT Capex Quarterly Report details the data center infrastructure capital expenditures of each of the 10 largest cloud service providers, as well as the rest-of-cloud, telco, and enterprise customer segments. Allocation of the data center infrastructure capex for servers, storage systems, and other auxiliary data center equipment is provided. The report also discusses market trends, drivers of the leading cloud service providers’ capex growth during the quarter, and the outlook for the next year.

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About the Author

Stephen Hardy | Editorial Director and Associate Publisher, Lightwave

Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.

Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.

He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.

You can connect with Stephen on LinkedIn as well as Twitter.