Dell'Oro Group reports 53% increase in data center capex for Q1 2025

A report by Dell'Oro Group indicated a 53% year-over-year increase in global data center capital expenditures for the first quarter of 2025. This marks the sixth consecutive quarter of double-digit annual growth. The surge is driven by hyperscale cloud service providers investing heavily in Artificial Intelligence (AI) infrastructure, with a focus on servers utilizing NVIDIA's Blackwell Graphics Processing Units and custom accelerators.

Baron Fung, Sr. Research Director at Dell'Oro Group, stated, “AI infrastructure continues to drive hyperscale capex, with strong demand for NVIDIA Blackwell-based servers and custom accelerators.” He noted that the Top 4 U.S. cloud service providers are increasing their Capital Expenditure (CAPEX) during a multi-year investment cycle, with the recent tariff uncertainties unlikely to change their spending plans significantly. Even with some project cancellations from U.S. providers, overall capital expenditures are projected to remain steady as hyperscalers optimize capacity rather than reduce investments.

Fung explained that enterprises are more cautious due to tighter budgets and tariff-related issues, leading to slight downward revisions in their CAPEX forecasts. He also highlighted that the Tier 2 cloud segment, especially new GPUaaS providers, is expected to experience the fastest growth moving forward.

According to the report, global data center spending is anticipated to rise by 30% in 2025, driven by sustained demand for AI infrastructure and a broader recovery in general-purpose servers and networking. High-end accelerated servers are projected to account for over one-third of total data center spending for the year. Dell led the Original Equipment Manufacturer (OEM) server revenue share in Q1 2025, followed by HPE and IEIT Systems, benefiting from demand for AI servers, although shipments of NVIDIA's NVL72 platform remain limited outside hyperscale markets.