Market research firm Dell’Oro Group reported that worldwide data center capital expenditure moved higher in the first quarter of 2026, attributing the increase to two forces working in tandem: continued buildouts of AI infrastructure and inflation in memory costs. The finding, published June 10, 2026, comes from the firm’s ongoing tracking of data center IT and infrastructure spending.
The headline pairing matters. It signals that the capex surge is being driven not only by more servers, accelerators, and facilities being deployed, but also by each unit of that equipment costing more — a distinction with real consequences for how the numbers should be read.
Executive Summary
Dell’Oro Group’s first-quarter 2026 reading extends a multi-year run of elevated data center spending tied to artificial intelligence. Capex — capital expenditure, the money operators sink into servers, networking gear, storage, and the facilities that house them — climbed again in the quarter, with AI infrastructure named as the primary engine and memory cost inflation as a significant amplifier.
The memory angle is the notable wrinkle. High-bandwidth memory (HBM) and conventional DRAM are essential inputs to AI servers, and when their prices rise, total spending rises even if unit volumes were flat. Dell’Oro’s framing suggests both effects are in play: operators are buying more, and paying more per unit of what they buy.
For the infrastructure industry, the read-through is that the AI spend cycle is broadening rather than cresting. Spending strength that persists into 2026 — after two years in which skeptics repeatedly called a peak — keeps demand signals strong for chipmakers, memory suppliers, server OEMs, colocation providers, and the power and cooling ecosystem behind them.
Broadening, Not Peaking
Every quarter of continued capex growth is a data point against the “AI bubble about to deflate” thesis — and a data point that must itself be scrutinized. A first-quarter increase in 2026 means the hyperscalers and large AI builders entered the year still accelerating, not digesting. Historically, capex cycles in IT infrastructure end with a visible plateau in quarterly spending before the decline; Dell’Oro’s reading indicates that plateau has not yet arrived.
The word “broadening” is doing real work here. Early AI capex was concentrated in a handful of hyperscale cloud providers. As the cycle matures, spending typically spreads to second-tier cloud operators, GPU-cloud specialists, enterprises building private AI capacity, and sovereign or national AI initiatives. A quarter in which growth continues at scale is consistent with that widening base of buyers, though the release headline alone does not break out who spent what.
Memory Inflation: Growth With an Asterisk
The second driver Dell’Oro names — memory cost inflation — deserves careful reading. Memory (DRAM for general computing, and especially high-bandwidth memory stacked directly alongside AI accelerators) has been in tight supply as AI demand outstripped what the small number of memory manufacturers could produce. When memory prices rise, every AI server costs more, and aggregate capex inflates mechanically.
That means dollar-denominated capex growth overstates the growth in deployed computing capacity. An analyst comparing 1Q 2026 spending to a year earlier is partly measuring more infrastructure and partly measuring more expensive infrastructure. For memory suppliers this is a windfall; for buyers it is margin pressure; for anyone using capex as a proxy for AI capacity coming online, it is a reason to discount the headline number somewhat. Dell’Oro’s decision to name inflation explicitly as a driver is a useful piece of intellectual honesty in a market prone to reading every big number as pure demand.
Winners Along the Supply Chain
The beneficiaries of this spending pattern are ordered by scarcity. Memory manufacturers sit at the top: rising prices on constrained supply flow almost directly to their revenue. Accelerator vendors and the server OEMs that integrate them continue to ride volume growth. Behind the IT equipment, the physical layer — data center developers, colocation operators, power equipment makers, and cooling specialists — benefits from every incremental megawatt the AI buildout requires, and their revenue tends to lag IT capex, meaning a strong 1Q 2026 for equipment implies continued facility demand into 2027.
The squeezed parties are buyers without pricing power. Smaller cloud providers and enterprises paying inflated memory prices face a worse cost position than hyperscalers, who negotiate supply agreements at scale. If memory inflation persists, it acts as a regressive tax on the smaller end of the AI market — one more force concentrating AI capacity among the largest players.
The Risk Ledger
None of this eliminates cycle risk. Capex is a leading indicator of expected demand, not proven demand: the spending only pays off if AI services generate revenue commensurate with the infrastructure behind them. Input-cost inflation adds a second risk — cycles fed partly by price increases can unwind sharply when supply catches up and prices normalize, as memory markets have done repeatedly across their history. And the physical constraints on the buildout, chiefly electric power availability, remain unresolved in many markets.
The balanced read: 1Q 2026 confirms the AI infrastructure cycle remains in its expansion phase, while the memory-inflation component is a reminder to separate dollars spent from capacity gained before drawing conclusions about either demand or durability.
Background
Data center capex has been the defining economic story of the AI era. Since large language models triggered an infrastructure race in 2023, the biggest cloud and AI companies have committed historically unprecedented sums to accelerated computing — spending that flows through chipmakers and server vendors into land, buildings, power, and cooling. Independent trackers like Dell’Oro Group, which has analyzed telecom and data center equipment markets since 1995, provide the industry’s scorecard for whether that race is accelerating or cooling.
Memory has emerged as the cycle’s chokepoint. Production of high-bandwidth memory is concentrated among a handful of manufacturers, and AI demand has kept supply tight, pushing prices upward across memory categories. That inflation now shows up directly in aggregate capex figures — making 2026 the year analysts must ask not just how much the industry is spending, but how much of that spending buys new capacity versus simply covering higher input costs.
Source: AI Infrastructure Buildouts and Memory Cost Inflation Drove Data Center Capex Higher in 1Q 2026, According to Dell’Oro Group — Dell’Oro Group’s first-quarter 2026 data center capex report announcement, published June 10, 2026.
