Global Webscale Capex Predicted to Surge in Coming Years

In a forecast that signals robust investment trends, the global webscale capital expenditure (Capex) is anticipated to hit $203 billion in 2024, with a further increase to $218 billion in 2025, according to analyst firm MTN Consulting.
Meta Platforms businessThe dip observed in total capex, which experienced a 5.1 percent decline to $192 billion in 2023, is not indicative of a negative market sentiment. Fluctuations in capex spend by quarter can be attributed to various factors such as supply chain disruptions.

Moreover, the webscale market, dominated by a handful of major players, exhibits volatility. Notably, the top four companies capture a staggering 77 percent of global capex.

Despite the slight dip in 2023, the outlook remains optimistic as major players pursue opportunities in GenAI (Generative Artificial Intelligence) even before the market fully matures or defines its parameters.

Here’s a breakdown of the spending outlook for key webscale players:

Amazon: Accounting for 27.4 percent of global webscale capex, Amazon’s capex in CY23 stood at $48.4 billion, a decrease of $10.2 billion year-on-year. However, the company anticipates a year-on-year increase in capex for 2024, primarily driven by infrastructure spending at Amazon Web Services (AWS) to accommodate regional expansions and additional investments in generative AI and large language models.

Microsoft: With 18.3 percent share, Microsoft witnessed lower-than-expected capex in 4Q23 due to a third-party capacity issue. However, the company foresees a significant sequential increase in capex in 1Q24, driven by investments in cloud and AI infrastructure. Plans are underway for a colossal $100 billion supercomputer data center campus dubbed “Stargate,” in collaboration with OpenAI, expected to commence operations by 2028.

Alphabet: Accounting for 16.8 percent of global webscale capex, Alphabet reported a capex of $11 billion in 4Q23, primarily directed towards servers and data centers. The company anticipates notably larger investments in capex in 2024, driven by the extensive applications of AI across various sectors.

Meta (formerly Facebook): With 14.2 percent share, Meta expects its CY24 capex to range between $30 to $37 billion, marking a $2 billion increase from the prior range. The company cites the need for infrastructure expansion to support the growth of services like Reels, alongside investments in servers and data centers.

Apple: As usual, Apple refrains from providing specific capex guidance, emphasizing its commitment to never underinvest in its business.

Oracle: Accounting for 3.6 percent of global webscale capex, Oracle reported a capex of $1.1 billion in 4Q23. Anticipated capex for the 12 months ending May 2024 stands at $8 billion, with considerable increases expected in the second half as more capacity comes online.

Additionally, Chinese cloud providers are expected to increase their spending, particularly in GenAI platforms, fueling competition and providing more options for expanding footprints.

In the most recent 12-month period, webscale companies generated $2.37 trillion in revenues, a 6.2 percent increase from the previous year. Despite fluctuations, the sector continues to demonstrate resilience and growth potential, propelled by advancements in technology and market dynamics.

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