Dell’Oro said that hyperscalers are accelerating investments in the DC field with vertically integrated platforms and custom chip architectures aimed at boosting performance and reducing compute costs
In sum – what to know:
Global data center capex to hit $1.2T by 2029 – Spending will grow at a 21% CAGR, with hyperscalers driving half of total investment globally.
AI chips dominate spending growth – GPUs and custom accelerators now represent a third of data center capex, and AI servers could reach 50% by 2029.
50GW in new capacity expected – Hyperscalers and colocation firms will add significant new power capacity over five years, despite a potential 2026 slowdown.
Global data center capital expenditure is expected to grow at a 21% compound annual growth rate (CAGR) through 2029, according to new research from Dell’Oro Group.
Hyperscale cloud providers are projected to contribute half of the projected $1.2 trillion in global data center capex over this period.
“We’ve revised our data center infrastructure spending forecast upward, driven primarily by the explosive growth of AI adoption,” said Baron Fung, senior research director at Dell’Oro Group. “GPUs and custom AI chips now represent about one-third of total capex, making them the leading growth driver. Investments will also remain strong across racks, general-purpose compute, storage, networking, and physical facilities,” he added.
Hyperscalers are accelerating investments in the DC market with vertically integrated platforms and custom chip architectures aimed at boosting performance and reducing compute costs. With support from both public and private sectors, global data center capacity is expected to expand significantly. Fung noted that over 50 GW of new capacity will be added globally in the next five years. While a modest dip may occur in 2026, long-term demand remains strong.
Additional highlights from the Dell’Oro report include:
-Accelerated servers for AI training and domain-specific workloads could represent approximately half of DC infrastructure spending by 2029.
-The top 4 U.S.-based cloud service providers — Amazon, Google, Meta, and Microsoft — will account for nearly half of global data center capex in 2025.
-The rest of cloud segment, consisting of neo-cloud and GPU-as-a-service providers, with a CAGR of 39%.
The global AI data center market is expected to surge from $17.54 billion this year to approximately $165.73 billion by 2034, growing at a compound annual growth rate (CAGR) of 28.34%, according to a recent research by Precedence Research.
This surge reflects rising demand for high-performance computing as AI adoption expands across industries, and governments accelerate national strategies around AI infrastructure, according to the research study.
Last year, the global AIDC market stood at $13.67 billion. The U.S. alone accounted for $3.73 billion; its total is forecast to reach $46.15 billion by 2034, with a slightly faster CAGR of 28.6%.
Precedence Research stated: “North America dominated the AIDC market with a major revenue share in 2024 due to its robust, technologically advanced infrastructure, strong investors in AI-ready data center infrastructures, and rapid AI adoption in various industries, aligning with government support and initiatives.
The research firm also noted that Asia-Pacific is projected to be the fastest-growing region in the AIDC field, driven by smart city initiatives, digital transformation, and supportive government policies. Countries across the region are implementing AI-focused regulations, and cities like Singapore, Tokyo, and Sydney are emerging as key AI infrastructure hubs.
It said: “China is a major player in the regional market, contributing to growth due to the expanding digital economy and government investments in AI infrastructure. The government initiatives in promoting AI adoption, developments, and data center constructions are fostering this growth. Additionally, country investments in innovations, including underwater cooling technology for data centers, further add to market growth.”
