Dive Brief:
- GPU demand drove a record spike in server sales during the first three months of the year, according to IDC research published Thursday. The market shot up 134% year over year to $95.2 billion in Q1, marking the largest quarterly increase the analyst firm has recorded in 25 years.
- IDC expects the market to surge past $360 billion in 2025, which would indicate 45% growth compared with last year. As AI adoption ramped up in 2024, server sales increased 73.5% to $244 billion dollars, according to the firm’s March market analysis.
- High-capacity GPU servers will make up roughly half the total market this year, according to IDC. “The evolution from simple chatbots to reasoning models to agentic AI will require several orders of magnitude more processing capacity, especially for inferencing,” IDC Research VP Kuba Stolarski said in the report.
Dive Insight:
As software providers add agentic automation to the growing menu of AI-based productivity tools, demand for traditional and accelerated compute resources is reshaping data centers, from massive cloud facilities to on-premises enterprise estates.
Multibillion-dollar hyperscale infrastructure investments flooded hardware manufacturers with orders during the first quarter of the year. The three largest cloud providers — AWS, Microsoft and Google Cloud — poured $24 billion, $21 billion and $17 billion, respectively, into capital expenditures, primarily to boost data center capacity.
Oracle’s quarterly CapEx more than doubled year over year to $21.2 billion during the three months ending May 31.
“When we all of a sudden have higher CapEx, it means we are filling out data centers and we are buying components to build our computers,” Oracle CEO Safra Catz said during a June earnings call.
Enterprise AI hardware orders rolled in, too, “with good representation across key industry verticals, including web tech, financial services industry, manufacturing, media and entertainment, and education,” Dell Technologies Vice Chairman and COO Jeff Clarke said during a May earnings call.
The company reported $6.3 billion in revenue for its server and networking segment, up 16% year over year for the three months ending May 2. Orders for AI servers surpassed $12 billion, eclipsing the entirety of shipments from the prior twelve months, Clarke said.
Hewlett Packard Enterprise’s server segment saw a 6% year-over-year server segment revenue boost to $4.1 billion, during the three months ending April 30.
IDC expects the server market to triple in size over the next three years, the report said.
