Hyperscale data centre CAPEX up 59% - but dominated by usual suspects

The sun continues to shine on the hyperscale data center market with investment in the sector continuing to surge.

New Q2 data from Synergy Research Group reveals that the capital expenditure (CAPEX) of hyperscale operators is up a whopping 59 percent from the same time last year, maintaining a record-setting start to the year.

CAPEX in the first half exceeded US$53 billion, compared with $31 billion in the first half of 2017. According to Synergy, Q2 CAPEX would have comfortably been the highest of all time had it not been for Google's purchase of Manhattan's Chelesea Market building in March, which boosted the Q1 figures by a cool $2.4 billion.

Coming at no surprise, while the relative rankings move around each quarter, for the last consecutive ten quarters the top five has always consisted of the same tech giants – Microsoft, Google, Amazon, Apple, and Facebook.

In total these companies account for more than 70 percent of aggregate hyperscale CAPEX, with CAPEX levels at three of the five at an all-time high in Q2. Outside of the top five, other leading hyperscale spenders in Q2 include Alibaba, Baidu, IBM, JD.com, NTT, Oracle, SAP and Tencent.

Synergy Research Group chief analyst John Dinsdale says the majority of hyperscale CAPEX is allocated towards building expanding colossal data centers, which have now grown in number to 420.

"Hyperscale CAPEX is one of the clearest indicators of the growth in cloud computing, digital enterprise and online lifestyles," says Dinsdale.

"CAPEX has reached levels that were previously unthinkable for these massive data center operators and it continues to climb. The largest of these hyperscale operators are building economic moats that smaller competitors have no chance of replicating. In cloud computing especially, the ability to fund hyperscale CAPEX levels has become a competition killer.

The research from Synergy is based on a study of the CAPEX and data center footprint of 20 of the world's largest major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking and eCommerce.