Knowledge facilities elevated capital expenditures (capex) by practically 50% within the second quarter of 2024, pushed by the urge for food for AI-ready {hardware}, in keeping with a brand new report from Dell’Oro Group.
Perception from the California-based analysis agency signifies that knowledge middle capex grew by 46% within the second quarter of 2024, in comparison with the identical interval a yr earlier.
The spending spree is predicted to proceed for the rest of the yr, albeit at a barely slower tempo. Dell’Oro forecasts a sturdy 35% development in worldwide knowledge middle capex general for 2024.
The group stated the expansion is basically fueled by the rising demand for GPU-accelerated servers designed for AI purposes.
“Accelerated servers are servers with GPUs and different customized accelerators, such because the Google TPU,” Baron Fung, senior analysis director at Dell’Oro Group, informed DCN.
The Dell’Oro numbers are the most recent in a collection of double-digit knowledge middle expenditure development predictions. Gartner forecasts that overall spending on data center systems will develop by 24% in 2024. Like Dell’Oro, development is partly attributed to the necessity to energy generative AI techniques and providers.
Omdia forecast on the finish of 2023 that the worldwide server market could be value $196 billion by 2027, whereas, a report from Basic Enterprise Insights & Consulting launched earlier this month estimated the marketplace for AI servers to be value $183 billion by 2032.
AI Acceleration: The Engine of Progress
Whereas development in accelerated servers is not any shock, the market is rising quicker than anticipated, in keeping with Dell’Oro researchers.
“Accelerated server income did exceed our prior forecast or expectations,” Fung stated. “Momentum for accelerated server adoption is robust, particularly for the hyperscale market.”
GPU-accelerated servers are outpacing regular server development within the knowledge middle when it comes to each income and shipments.
Fung stated that over 5 years from 2023 to 2028, the compound annual development fee for general-purpose servers is forecast to develop by solely 3%, versus 31% for accelerated servers.
AI workloads are forecast to develop at a tempo of 25-35% by means of 2027, in keeping with Bain & Firm’s newest Global Technology Report.
“Generative AI is the prime mover of the present wave of change, however it’s difficult by post-globalization shifts and the necessity to adapt enterprise processes to ship worth,” stated David Crawford, chairman of Bain’s world expertise observe.
Accelerated Computing’s Affect on Knowledge Heart Capex
The affect of accelerated computing on knowledge middle capex is being felt all over the world, nevertheless it received’t final without end, analysts stated.
“It’s each rising as a share of the whole and possibly additionally driving the whole market dimension,” Omdia analyst Alexander Harrowell, informed DCN.
“That stated, it’s rising considerably quicker than the whole market, so in some unspecified time in the future, the traditional S-curve dynamic will kick in, most likely within the subsequent two to a few years, simply because the pool of potential adopters will likely be exhausted,” Harrowell stated. “That can go away us with a world of way more heterogeneous computing.”
When it comes to market dynamics, Harrowell stated Nvidia’s knowledge middle enterprise is more likely to be round 10 instances the dimensions of Intel’s knowledge middle and AI division this yr. The market is additional buoyed by hyperscalers’ customized ASIC chips, together with choices from chipmakers together with AMD and Huawei.
AI Server Market Leaders and Income Distribution
Within the aggressive panorama of knowledge middle server suppliers, Dell emerged because the chief by income for Q2 2024, adopted by HPE and Supermicro, in keeping with Dell’Oro evaluation.
Notably, accelerated servers accounted for an estimated 41% of OEM server revenues through the quarter, highlighting their important affect in the marketplace.
The elevated demand for accelerator providers may even seemingly drive extra spending in associated areas as properly, comparable to networking.
Fung famous that networking can be benefiting from a rise in accelerated computing adoption.
“Accelerated servers normally require extra community bandwidth than general-purpose servers,” he stated.
“If the accelerated servers are interconnected in a big cluster that’s used for the coaching of enormous language fashions or generative AI fashions, then a devoted community, referred to as a back-end community, could be wanted.
“This back-end community is even quicker than the front-end community, and there have been plenty of current improvements behind this new market.”
