After a bit of a lull in the first half of this year, hyperscale operator capex was once again booming in the third quarter, according to Synergy Research Group.
Hyperscale provider capex in the third quarter reached the $31 billion mark, which was an 8% increase compared to the same quarter a year ago. While capex was down marginally in the first two quarters of 2019, the third quarter numbers point to a significant return to growth, according to Synergy Research Group (SRG.)
Tallying up the first three quarters of 2019, capex is now ahead of the record-setting levels seen in all of 2018. The top-five big spenders in the third quarter were the usual suspects—Amazon Web Services, Google, Microsoft, Facebook and Apple—whose capex budgets far exceeded the rest of the hyperscale operator field.
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Aside of Apple, the other four hyperscale operators posted year-on-year increases in capex spending in the third quarter. Outside of the top five, other leading hyperscale spenders include Alibaba, Tencent, IBM, JD.com, Baidu and Oracle.
“As expected there was a significant boost in capex in the third quarter, after a couple of quarters that were relatively soft in comparison with the lofty heights achieved in 2018,” said John Dinsdale, a chief analyst at Synergy Research Group, in a statement. “Hyperscale companies are in growth mode and revenue growth rates remain in strong double-digit territory, with aggregated Q3 revenues up 14% over 2018. Amazon, Google, Facebook and Alibaba are all growing much more rapidly than that. These expanding companies are highly reliant on bigger and better data center operations, which will drive continued growth in capex levels.”
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A large chunk of the hyperscale capex spending went towards expanding and equipping their data centers, which have grown in number in order to support double-digit revenue growth rates. The number of hyperscale data centers increased to 504 at the end of Q3, which tripled the total from the beginning of 2013. The total number of data centers increased by 55 over the last four quarters, which marked a bigger increase than was seen in the previous four quarters, according to SRG.
SRG's hyperscale data was based on analysis of the capex and data center footprint of 20 of the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking and e-commerce.
