Forecast Predicts Data Center Switch Sales in AI Network Segments to Surpass $100 Billion by 2029
In a significant report released by the Dell'Oro Group, projections indicate that the sales of data center switches within AI back-end networks will exceed an impressive $100 billion during the upcoming five-year period, from 2025 to 2029. This forecast highlights the increasing demand for advanced network infrastructures as organizations pivot toward artificial intelligence-driven workloads.
The 2024 market landscape witnessed strong leadership from major players including Celestica, Huawei, and NVIDIA. However, the report alludes to potential shifts in these dynamics as we progress into 2025. The evolving market is expected to respond to a myriad of factors, including rising interest in high-performance networking equipment to support the AI boom.
Sameh Boujelbene, Vice President at Dell'Oro Group, noted that even amid uncertainties regarding future investments in accelerated infrastructure—especially following recent developments from competitors like DeepSeek—strong demand for premium accelerators remains robust. The updated forecasting of data center switch sales underscores a favorable market outlook, particularly for Ethernet technologies, while the anticipated growth of the InfiniBand segment has been adjusted downward.
The uptake of Ethernet is surging, propelled by substantial supply and demand trends. A noticeable shift towards Ethernet as the foundational fabric for AI clusters has emerged, dominating deployments even among prominent NVIDIA GPU-focused installations, such as xAI's Colossus. Notably, the transition has accelerated the forecasted timeline for Ethernet to overtake InfiniBand, anticipated to occur earlier than previously expected.
In 2024, industry leaders in the Ethernet segment retained their positions, but forecasts indicate that competitors—like Accton, Arista, Cisco, Juniper, and Nokia—are poised to gain momentum in 2025, further reshaping the competitive landscape.
The report comprehensively outlines that by the year 2025, a substantial portion of switch ports utilized in these AI back-end networks are projected to operate at speeds of 800 Gbps, escalating to 1600 Gbps by 2027, and possibly reaching 3200 Gbps by 2030.
Primary demand drivers will be Tier 1 cloud service providers, although a noteworthy surge in demand from Tier 2/3 providers and large enterprises is expected due to their accelerating adoption of AI workloads.
This detailed analysis presented in the 'AI Networks for AI Workloads' report draws attention to the bifurcation between InfiniBand and Ethernet, alongside the strategic decisions made by large cloud service providers, emphasizing the critical landscape of AI-driven networks for the foreseeable future.
As the industry evolves, Dell’Oro Group continues to delve into the intricacies influencing market trends and provides valuable insights for stakeholders navigating this transformative technology realm. The organization's robust research methodology facilitates data-driven decision-making and prepares enterprises for future challenges and opportunities in a rapidly evolving digital landscape.
For further information regarding the report or details about market developments, you can contact the Dell'Oro Group directly.
This forecast underlines the promising yet volatile nature of the AI networking environment, hinting at vast opportunities and challenges that lie ahead for market participants as the demand for efficient, scalable, and high-speed networking evolves in tandem with technological advancements.
The 2024 market landscape witnessed strong leadership from major players including Celestica, Huawei, and NVIDIA. However, the report alludes to potential shifts in these dynamics as we progress into 2025. The evolving market is expected to respond to a myriad of factors, including rising interest in high-performance networking equipment to support the AI boom.
Sameh Boujelbene, Vice President at Dell'Oro Group, noted that even amid uncertainties regarding future investments in accelerated infrastructure—especially following recent developments from competitors like DeepSeek—strong demand for premium accelerators remains robust. The updated forecasting of data center switch sales underscores a favorable market outlook, particularly for Ethernet technologies, while the anticipated growth of the InfiniBand segment has been adjusted downward.
The uptake of Ethernet is surging, propelled by substantial supply and demand trends. A noticeable shift towards Ethernet as the foundational fabric for AI clusters has emerged, dominating deployments even among prominent NVIDIA GPU-focused installations, such as xAI's Colossus. Notably, the transition has accelerated the forecasted timeline for Ethernet to overtake InfiniBand, anticipated to occur earlier than previously expected.
In 2024, industry leaders in the Ethernet segment retained their positions, but forecasts indicate that competitors—like Accton, Arista, Cisco, Juniper, and Nokia—are poised to gain momentum in 2025, further reshaping the competitive landscape.
The report comprehensively outlines that by the year 2025, a substantial portion of switch ports utilized in these AI back-end networks are projected to operate at speeds of 800 Gbps, escalating to 1600 Gbps by 2027, and possibly reaching 3200 Gbps by 2030.
Primary demand drivers will be Tier 1 cloud service providers, although a noteworthy surge in demand from Tier 2/3 providers and large enterprises is expected due to their accelerating adoption of AI workloads.
This detailed analysis presented in the 'AI Networks for AI Workloads' report draws attention to the bifurcation between InfiniBand and Ethernet, alongside the strategic decisions made by large cloud service providers, emphasizing the critical landscape of AI-driven networks for the foreseeable future.
As the industry evolves, Dell’Oro Group continues to delve into the intricacies influencing market trends and provides valuable insights for stakeholders navigating this transformative technology realm. The organization's robust research methodology facilitates data-driven decision-making and prepares enterprises for future challenges and opportunities in a rapidly evolving digital landscape.
For further information regarding the report or details about market developments, you can contact the Dell'Oro Group directly.
This forecast underlines the promising yet volatile nature of the AI networking environment, hinting at vast opportunities and challenges that lie ahead for market participants as the demand for efficient, scalable, and high-speed networking evolves in tandem with technological advancements.
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