Cloud providers grow capacity
While AI was a clear factor, the research firm found that the top four cloud providers—Amazon, Google, Meta and Microsoft—enhanced general-purpose compute capacity.
Fung said this group leveraged new “CPUs from Intel and AMD, along with custom ARM CPUs, to improve server consolidation and efficiency.”
He added that macroeconomic headwinds in the enterprise market and reduced US federal IT budgets could create “risks” for the rest of the year.
“These factors may prompt enterprises to shift workloads to public clouds to preserve capital in the near term,” Fung said.
Long-term growth prospects
As hyperscalers raise guidance to support AI buildouts, updates and increased general-purpose compute demand, Dell’Oro forecasts that worldwide data center capex will rise more than 30 percent in 2025.
However, the research firm cautioned that data center capex growth will moderate in 2026 for both hyperscalers and the broader market.
Nevertheless, long-term growth prospects remain strong.
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