Hyperscaler Data Centers Set to Triple Cloud Capacity

Projections from Synergy Research Group (SRG) suggest that hyperscaler data centers are gearing up for a massive expansion, nearly tripling their cloud compute and storage capacity over the next six years. The findings are based on an analysis of 19 global cloud and internet service firms, revealing a significant uptrend in data center buildouts and upgrades by hyperscalers.

Generative AI Workloads Drive Accelerated Expansion

While cloud capacity has steadily increased, SRG’s report highlights a key driver for this accelerated growth: the expected surge in high-intensity generative AI workloads. As organizations increasingly rely on generative AI technology and services, cloud providers are adapting their strategies to meet the rising demand. According to experts at SRG, the changes are not just about launching new data centers but also about enhancing the capacity and power density of these facilities, particularly as Graphics Processing Units (GPUs) are deployed in larger numbers.

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Current Data Center Landscape and Future Expansion

SRG’s analysis revealed that the hyperscale cloud providers it examined operated 926 major data centers globally in mid-2023, with plans to open an additional 427 facilities. This number has doubled in the past five years, underscoring the rapid growth in data center infrastructure.

Companies like Oracle are actively contributing to this expansion. Oracle recently began constructing six new data centers, expanding its global cloud region portfolio to 64 active regions worldwide. Additionally, Oracle has partnered with Microsoft, allowing its database hardware to be hosted in Azure data centers.

The growth of the data center industry is also reflected in employment figures. A report commissioned by the Data Center Coalition and conducted by PwC revealed a 17% increase in employment volume in the U.S. data center industry from 2017 to 2021. This growth is attributed to the proliferation of cloud services, data-intensive applications, and digital technologies.

While expanding cloud capacity is essential to meet growing demand, it also comes with challenges. Introducing more powerful computing technology for AI workloads consumes additional energy, potentially leading to higher operational costs for data center operators.

As hyperscalers continue to invest in infrastructure upgrades and expansion, the cloud industry is set to evolve significantly, driven by the need to support emerging technologies like generative AI while addressing the associated energy and cost challenges.