Hyperscale data center capex on track for 28% growth in 2022, per DellOro Group analysis.

According to a recently published report by Dell'Oro Group, hyperscale data center capex is on track for 28 percent growth in 2022. However, the cloud service providers are expected to enter a digestion cycle in 2023, signaling a shift in spending patterns after a period of robust investment.

Data center capex has grown double-digits for the fifth consecutive quarter, led by US hyperscalers' investments in new data center footprints. "With supply improvements in the recent quarter, vendors were able to reduce backlog significantly in the rest of cloud and enterprise markets," said Baron Fung, Research Director at Dell'Oro Group.

Despite these supply improvements, growth headwinds loom ahead. "We anticipate growth headwinds ahead, as the hyperscalers wind down on their expansion cycle, and enterprises tighten IT capital spending in light of an uncertain business climate," Fung explained. This contraction reflects broader economic pressures affecting technology investment decisions across major market segments.

Dell'Oro Group's Data Center IT Capex Quarterly Report details the data center infrastructure capital expenditures of each of the ten largest cloud service providers, as well as the Rest-of-Cloud, Telco, and Enterprise customer segments. The report provides allocation of data center infrastructure capex across servers, storage systems, and other auxiliary data center equipment, while also discussing market trends and drivers of the leading cloud service providers' capex growth during the quarter and the outlook for the following year. Dell'Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks infrastructure, and data center markets, providing in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions.