Please someone clarify this question

None of the above. Run OPTIMIZE to consolidate the files into the desired 1GB chunks, and consider using yearly partitions.

(they want you to increase the capacity, of course)

Hi  Sinduja,

Thank you for reaching out to Microsoft Fabric Community.

Given the data growth and the performance issues you're seeing in Power BI Direct Lake reports, the best approach would be to enable V-Order. This optimizes columnar storage, improving query performance significantly without increasing costs.

Adding to what lbendlin said, running OPTIMIZE in your Fabric Warehouse will consolidate small Delta files into efficient 1GB chunks, reducing the overhead on queries. Since your reports rely on year-over-year analysis, implementing yearly partitions can further improve performance by limiting the amount of scanned data.

Scaling up capacity F32 to higher is always an option, but before increasing costs, I would recommend enabling V-Order and optimizing storage. Let us if you any further queries.

If this post helps, then please consider Accepting as solution to help the other members find it more quickly, don't forget to give a "Kudos" – I’d truly appreciate it!