Hyperscalers Set $99B Capex Record, Says Synergy

Hyperscalers dropped some serious dough in the first three quarters of 2020 — $99 billion to be exact — up 16% from 2019, according to the latest numbers from Synergy Research Group (SRG).  Hyperscalers dropped some serious dough in the first three quarters of 2020 — $99 billion to be exact — up 16% from 2019, according to the latest numbers from Synergy Research Group (SRG).  During the third quarter alone, hyperscale operator capex spending topped $37 billion, which set a record for quarterly spending, according to the analyst group.   There must be something about lucky number three as this time last year marked a significant return to growth from the record-setting levels of hyperscale operator capex seen in 2018.  According to Synergy’s research, the biggest hyperscale spenders in Q3 were Amazon, Google, Microsoft, and Facebook, whose capex budgets far exceeded other hyperscale operators. And not far behind the biggest spenders were Apple, Alibaba, and Tencent. It’s worth noting that Apple’s third quarter capex dropped off sharply in comparison to 2019 when the vendor was named a top spender.  Outside of the top seven, other leading hyperscale spenders included IBM, Oracle, JD.com, and NTT.  In aggregate, the 20 companies generated revenues of over $1.1 trillion in the first three quarters of the year, up 15% from 2019. Much of that hyperscale capex targeted building, expanding, and equipping huge data centers to meet the demands brought on by the pandemic. The cloud giants also build more data centers this year. Synergy’s report noted that their collective facilities total 573, representing a 14% increase from the 504 in 2019.  The firm’s research is based on analysis of the capex and data center footprint of 20 of the world’s largest cloud and internet service firms. This includes the largest as-a-service operators, search, social networking, and e-commerce.  “As expected the hyperscale operators are having little difficulty weathering the pandemic storm. Their revenues and capex have both grown by strong double-digit amounts this year and this has flowed down to strong growth in spending on data centers, up 18% from 2019,” said John Dinsdale, chief analyst at Synergy Research Group in a statement. “As these companies go from strength to strength they need an ever-larger footprint of data centers to support their rapidly expanding digital activities. This is good news for companies in the data center ecosystem who can ride along in the slipstream of the hyperscale operators.”