Data Center Investments Growing As Cloud Spending Increases

The cloud spending boom has been front of mind for IT decision-makers across all industries in recent months, and the latest set of fiscal reports from hyperscale service providers prove that, right now, betting big on the cloud is good business.

In late April, cloud giants Amazon, Google and Microsoft released their 2015 first quarter expenditure reports and proved all of the money they have invested into data centers, equipment and software is paying off. Combined, the three service providers spent slightly more than $6 billion in the first quarter of this year, an increase of 15 percent year-over-year. Such large amounts of spending may have caused investors to shy away, but it it appears that just the opposite is happening.

Amazon's stock prices rose 14 percent in the end of April, adding more than $25 billion to the company's market cap. After announcing its commercial cloud business is now bringing in more than $6 billion in annual revenue, Microsoft's shares rose by over 10 percent. Google, with the highest year-over-year increase in capital expenditure at 25 percent, reported an increase in stock price of 3 percent.

Spending on physical infrastructure increases as cloud gains popularity
According to forecasts by market research firm IDC, the cloud computing market will grow to twice its current value by 2018, reaching $127 billion. These hyperscale companies are banking on this rapid growth and ramping up investments on cloud data centers accordingly. Currently Amazon Web Services is the clear market leader, growing 50 percent in the first quarter year-over-year. But in order to catch up with the undisputed leader, Microsoft and Google are investing heavily in data centers and cloud infrastructure.

Earlier in April, Google announced its plans to invest approximately $1 billion into the expansion of its Council Bluffs, Iowa data center campus, adding to the $1.5 billion the company had already spent on expanding capacity in the facility in the past. Microsoft has perhaps been the most active in creating new computing sites. About an hour away from Google's Iowa data center sits Microsoft's West Des Moines facility, which cost the company $1.1 billion to build. In addition to domestic facilities, Microsoft has been looking to open more sites overseas and plans to invest another $1 billion into the creation of a new Dublin data center.

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