New Q3 data from Synergy Research Group shows that the CAPEX of hyperscale operators once again topped $26 billion in the quarter, keeping 2018 numbers at record-setting levels. Hyperscale CAPEX for the first three quarters is up 53% compared with the same period in 2017. Q3 CAPEX would have been the highest ever had it not been for Google's purchase of Manhattan’s Chelsea Market building in March, which gave the Q1 numbers a $2.4 billion boost. While the relative ranking moves around each quarter, for the last ten quarters the top five group of spenders has always consisted of Google, Microsoft, Amazon, Apple, and Facebook, which in aggregate account for 70% of hyperscale CAPEX. Microsoft CAPEX reached a record level in Q3, while CAPEX at the other four leaders dropped off marginally compared with the all-time highs seen in the previous quarter. Beyond this group, Alibaba CAPEX leapt in the quarter putting it way ahead of other hyperscale operators.

Much of the hyperscale CAPEX goes towards building, expanding, and equipping huge data centers, which have now grown in number to 423. The research is based on analysis of the CAPEX and data center footprint of 20 of the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking, and e-commerce. Outside of the top five, other leading hyperscale spenders in Q2 included Alibaba, Baidu, IBM,, NTT, and Tencent.

“Business at the hyperscale operators is booming. Over the last four quarters their year-on-year revenue growth has averaged 24% and they are investing an ever-growing percentage of their revenues in CAPEX,” said John Dinsdale, a chief analyst at Synergy Research Group. “That is a real boon for data center technology vendors and for colocation/wholesale data center operators, but it has created a huge barrier for companies wishing to meaningfully compete with those hyperscale firms. This is a game of massive scale and only a few can play that game.”