Ramp-up in hyperscalers’ datacentre spend in Q3 puts 2019 on course to become record-breaking year

An 8% surge in hyperscale datacentre spend during the third quarter means 2019 could exceed the record levels of capital expenditure (capex) made by operators last year, research suggests.

Synergy Research Group’s latest hyperscale market tracker shows operators shelled out $31bn during Q3 on building out their datacentres, which is markedly up on the two previous quarters.

So much so that the market-watcher said the market’s Q3 performance means the total spend by the hyperscalers so far this year is now higher than it was at this point in 2018, which turned out to be a record-breaking year for datacentre spend.

“After capex reached dizzying heights in 2018, the hyperscale operators took their foot off the gas a little in the first half of 2019, but in Q3 they pushed the pedal to the metal again,” said John Dinsdale, chief analyst at Synergy Research Group.

“Q3 capex was up 8% from 2018, meaning that total spending in Q1-Q3 edged higher than the record levels seen last year.”

Synergy called out Amazon, Google, Microsoft and Facebook as being the main driving forces behind much of the spend in Q3, citing the fact that all four firms are expanding at “strong double-digit rates” and need to invest in datacentres to underpin their growth.

Rounding out the top five hyperscale datacentre investors is Apple, which is the only one of that group not to have recorded a sizeable year-on-year increase in capex spending in Q3.

This finding follows the news that Apple has called off two large datacentre projects within Europe in recent years, including its bid to build a server farm campus in Athenry, County Galway, Ireland, and another in Denmark, in June 2019.

The Synergy market tracker keeps tabs on the datacentre investment habits of the world’s 20 biggest cloud and internet firms, which, collectively, are responsible for operating 504 hyperscale facilities across the world, its data shows.  

And this number is almost certain to increase in the years to come, said Dinsdale.

“Hyperscale companies are in growth mode and revenue growth rates remain in strong double-digit territory, with aggregated Q3 revenues up 14% over 2018,” he said. “Amazon, Google, Facebook and Alibaba are all growing much more rapidly than that.  

“These expanding companies are highly reliant on bigger and better datacentre operations, which will drive continued growth in capex levels.”

As was recently reported by Computer Weekly, the capex investment plans of the hyperscalers are also propelling the colocation sector to new highs, with CBRE’s most recent European market data suggesting that 2019 is on course to become another record-breaker in capacity take-up.