US hyperscaler data center capex returns to growth in Q2 2019, with networking investment outpacing declining compute/storage costs.

According to a newly released report issued by founding analysts of 650 Group, US Hyperscaler Cloud market revenue grew 25% Y/Y in 2Q19, while CAPEX used for DC Equipment returned to growth with mid-teen Y/Y results. The Cloud Report covers Colocation, IaaS, SaaS, and Search & Social markets, providing analysis that extends beyond cloud revenue alone.

The report includes comprehensive CAPEX studies for the Colocation, IaaS, SaaS, and Search and Social Media markets, with particular focus on spending specifically for data center equipment. It provides a unique examination of where and how the largest cloud providers deploy equipment, identifying a notable trend towards more CAPEX spending occurring in IaaS, as many SaaS providers increasingly choose IaaS infrastructure instead of building out their own infrastructure.

According to Alan Weckel, founding analyst for 650 Group, "2Q19 Cloud results rebounded strongly albeit with very mixed results." Weckel noted that strong networking growth in 2Q19 remained 100 Gbps dominated with minimal 400 Gbps shipments. Strong commodity price declines remained in parts of the supply chain. Weckel stated that forecast projections for the remainder of 2019 and early 2020 remain unchanged, with the team continuing to expect uneven CAPEX growth amongst the US hyperscalers for the remainder of the year.

650 Group is a leading Market Intelligence Research firm for communications, data center and cloud markets. The team has decades of research experience, has worked in the technology industry, and is actively involved in standards bodies, focusing on leading edge market trends and research with a commitment to first-to-market intelligence.