AI demand and memory costs drove a 92% second-quarter data center capex increase
The worldwide data center market is navigating a major spending cycle, with capital expenditure accelerating sharply in the second quarter.
Dell’Oro Group noted that several factors are influencing hyperscaler spending.
AI infrastructure investment supported growth across compute, storage, networking, and physical infrastructure.
“Data center capex growth broadened in the second quarter as investment accelerated across both established Cloud service providers and emerging AI infrastructure customers,” said Baron Fung, VP of Research at Dell’Oro Group. “Spending remained concentrated in NVIDIA Blackwell Ultra and hyperscaler custom accelerators, while agentic AI created incremental demand for general-purpose compute, storage, and complementary networking.”
Memory and storage price issues
Higher memory and storage prices significantly increased average server selling prices and drove additional capex.
Dell led server OEM revenue.
Supermicro and Lenovo closely followed, while white-box server revenue reached what Dell’Oro said was a record high.
The neocloud factor
Neocloud and AI Model Builder saw a major uptick during the second quarter.
These two markets were the fastest among customer segments, reflecting what Dell’Oro calls “the early stages of their infrastructure buildouts.”
Also, Neocloud providers and AI model builders are increasing their contributions to infrastructure investment.
Dell’Oro noted that these companies are rapidly expanding their own capacity while deepening partnerships with cloud service providers.
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About the Author
Sean BuckleySean Buckley
Sean is the Editor-in-Chief of Lightwave. He establishes and executes Lightwave's editorial strategy across its website, email newsletters, events, and other information products. Before coming to Lightwave in July 2023, he served as editor of Broadband Communities. Earlier, he served as senior editor of FierceTelecom and the editor of the former Telecommunications Magazine. He got his start in the optical industry in 1998 when he became the editor of enterprise and optical networks at Information Gatekeepers. He has a BA in English from the University of Massachusetts, Boston, and lives in Dracut, Mass, with his wife, two sons, and his cat, Dove.
