Worldwide data center capex jumped 53% in Q1 2025 on rising AI investments

Worldwide data center capex rose 50 percent in the first quarter
Hyperscale cloud service providers increase AI infrastructure investments
Dell'Oro forecasts global data center market will grow by 30 percent in 2025
Dell, HPE and IEIT increase revenue share

With the rise of new AI investments, worldwide capital expenditures (capex) surged 53 percent year-over-year in the first quarter of 2025, marking the sixth consecutive quarter of double-digit annual growth.

This new growth cycle is driven by hyperscale cloud service providers' increasing investments in AI infrastructure, particularly through the deployment of servers powered by NVIDIA’s Blackwell GPU and custom accelerators.

“AI infrastructure continues to drive hyperscale capex, with strong demand for NVIDIA Blackwell-based servers and custom accelerators,” said Baron Fung, senior research director at Dell’Oro Group. “The Top 4 US cloud service providers continue to raise capex levels as part of a multi-year investment cycle.”

Baron Fung, senior research director at Dell’Oro Group.

More growth to come

The global data center market is poised for further growth.

In 2025, Dell’Oro forecasts that the global data center market will grow by 30 percent, driven by sustained demand for AI infrastructure and a broader recovery in general-purpose infrastructure for servers and networking.

A significant contributor to growth will be high-end accelerated servers. The research projects this segment to account for over one-third of the total data center capex this year.

Fung said that hyperscaler spending plans won’t be impacted by tariff-related uncertainty because of their “diversified global supply chains.”

There are some differences between hyperscalers, Tier 2 cloud providers and enterprises.

Fung said that although some U.S. cloud providers cancelled some projects, “overall capex remains on track, with hyperscalers adjusting capacity rather than cutting investments.”

Likewise, Fung added that the Tier 2 cloud segment, led by emerging GPUaaS providers, will experience rapid growth in 2025 and subsequent years.

However, Fung noted that enterprises with tighter budgets and weathering tariff-related risks “are more cautious, prompting slight downward revisions to their capital expenditure forecasts.”

Dell, HPE and IEIT Systems dominate

On the vendor front, Dell led the OEM server revenue share at $6.3 billion, up 16% during the fiscal first quarter of the 2026 reporting period.

Not far behind Dell were Hewlett Packard Enterprise (HPE) and IEIT Systems.

HPE, in its fiscal year second-quarter results, reported $4.1 billion in server revenue, up 6% year-over-year. The company noted that this growth was driven by strong performance in both traditional and AI-optimized servers, with a notable increase in revenue from AI servers.

A significant driver of growth was the demand for AI servers. However, Dell’Oro found that shipments of the NVIDIA NVL72 platform remain limited outside of the hyperscale market.

White-box vendors also had a great showing during the first quarter. This segment accounted for more than 60 percent of the server market, driven by hyperscale AI server deployments, particularly on the NVL72 platform.

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