Global data center capital expenditure is projected to exceed $1 trillion, with AI infrastructure driving a significant share of investments, according to a new forecast from Dell’Oro Grou
The firm’s latest Data Centre IT Capex 5-Year Forecast Report anticipates a compound annual growth rate (CAGR) of 21% in data center spending. By 2029, AI training and domain-specific workloads are expected to account for nearly half of global data center infrastructure investments.
The long-term outlook remains positive despite concerns over the current return on AI investments. “While AI spending has yet to meet desired returns and efficiency improvements, long-term growth remains assured, driven by hyperscalers’ multi-year capex cycles and government initiatives such as the $500 billion Stargate project,” said Baron Fung, Senior Research Director at Dell’Oro Group.
The report highlights that tech giants AWS, Google, Meta, and Microsoft will collectively contribute to nearly half of global data centre spending in 2025. Microsoft alone is set to invest $80 billion in AI-enabled data centres this year.
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While these industry leaders dominate capital expenditure, select Tier 2 cloud service providers are ramping up investments. Oracle has joined the Stargate project alongside OpenAI, SoftBank, and Microsoft to expand AI infrastructure in the US. Meanwhile, Vultr is developing an AI supercomputer cloud cluster with Juniper Networks, AMD, and Broadcom support.
Fung noted that efficiency gains in AI model training, including advancements by DeepSeek, are reshaping the sector. “Key areas of focus include accelerated computing through GPUs and custom accelerators, large language model optimisations, and next-generation rack-scale and network infrastructure—all crucial for sustainable growth from both a cost and power perspective,” he added.
With AI-driven expansion at the forefront, data center spending is poised for rapid growth, reshaping the cloud computing landscape in the years ahead.
