Description
The hyperscale cloud sector continues to move forward steadily. After a bumpy period that saw growth rates decelerate, the sector has found itself on firm and stable footing. The numbers speak volumes. Top-line revenue growth is up, operating margins continue to improve, and CapEx is climbing on a quarterly basis. The CapEx outlays and investments in alternative energy sources speak clearly to how hyperscalers view the future. There is confidence in both the near-term and long-term demand profile and belief that an inflection point is coming that will see AI take things to the next level. The response from hyperscalers has been to over-invest rather than get left behind by under-investing. Everything being said around overbuilds, data centre gluts and weakening demand is just noise. It will continue to be there, but the hyperscalers have made a conscious decision to ignore it.
The hyperscale cloud sector is about to get bigger. In the recent quarter, we added ByteDance’s public cloud service to our tracking. This gives us eight public cloud infrastructure platforms – four from the US and four from China – to make up the market. The Chinese hyperscale platforms are coming out of a long period of stagnation and positioned to start growing again. Growth rates are up, buoyed by AI, and they are following the US hyperscalers in making significant CapEx investments and building out data centres.
Hyperscale cloud growth continues to drive the data centre colocation market. Hyperscalers continue to self-build, but are using colocation to augment and future-proof deployments, while providing an option to address planning misses and unexpected scenarios. The fact that the Chinese clouds use colocation almost exclusively outside China is sure to boost demand for data centre infrastructure, especially in APAC. BytePlus is already taking down colocation capacity in Southeast Asia and other Chinese hyperscalers are set to expand after a relatively slow period of absorption. The growth is likely to be focused on existing markets, with new market entry a bit tempered amid geopolitical uncertainties and varied market dynamics.
This report provides comprehensive growth rate projections and total revenue estimates for the world’s eight hyperscale cloud platforms (up from seven last quarter) on a five-year basis. This quarter, as mentioned above, we added ByteDance’s public cloud service BytePlus to these numbers. Included are geographic splits and a total market summation. This latest version also features a refresh of our hyperscale cloud region and interconnection node tracking. We have upped our projections again and have hyperscale cloud projected to reach $742.2b in value in 2029, with a five-year CAGR of 27%. The five-year CAGR has fallen in the 21-24% range over the last few years, but is set to continue climbing as market conditions
