#United States #Redwood City #AI Technologies #Dell'Oro Group #GPUs

AI Demand Fuels Record Revenues for Server and Storage Components

Introduction

The latest report from Dell'Oro Group indicates a significant leap in the revenues of server and storage components, reaching an all-time high of $244 billion in 2024. This remarkable growth is largely driven by an insatiable demand for artificial intelligence (AI) technologies, which demand cutting-edge hardware such as GPUs, custom accelerators, and high-performance storage solutions tailored to support intensive AI workloads.

Key Factors Behind the Growth

1. Rise of GPUs and Custom Accelerators

According to Baron Fung, Senior Research Director at Dell'Oro Group, NVIDIA GPU systems have become the backbone of this growth, particularly models using the Hopper platform. AMD has also gained traction among cloud service providers, leveraging its Instinct platform to capture market share. The rapid integration of these technologies demonstrates how essential they are for organizations looking to harness AI capabilities effectively.

2. Cloud Service Providers' Adoption

Another significant driver of revenue growth comes from the four major US cloud service providers—Google, Amazon, Microsoft, and others—who have ramped up the adoption of accelerated servers. These systems are specially designed for AI training and inference, reflecting a broader industry shift toward advanced processing needs.

3. Market Recovery and Improved Pricing

2024 saw a solid recovery in the general-purpose server market, with demand for memory and storage components bouncing back notably. Improved pricing strategies throughout the year have also contributed to the overall revenue increase, further solidifying market dynamics in favor of component suppliers.

Future Projections

Looking toward 2025, the report forecasts continued strength in the server and storage systems component market, expecting more than 40% growth. The sustained investment in AI infrastructure will bolster demand for critical components, including:

• - GPUs
• - Custom Accelerators
• - High Bandwidth Memory (HBM)
• - High-capacity Solid State Drives (SSDs)

The anticipated growth trajectory signals robust opportunities for technological advancements and market competitiveness, particularly in sectors heavily invested in AI capabilities.

Market Dynamics and Competition

While NVIDIA holds a commanding lead in the Data Center Component market, with nearly 50% of reported revenues, it faces increasing competition from other players like Samsung and SK Hynix, particularly as hyperscale cloud service providers explore bespoke solutions for their specific needs.

Smart Network Interface Cards (Smart NICs) and Data Processing Units (DPUs) also showcased impressive gains, with revenues soaring by 77% due to extensive deployment in AI-driven clusters. The resurgence in CPU markets is expected to contribute even further, with projected revenues increasing by 45% in 2025.

Conclusion

The extraordinary growth in server and storage component revenues to $244 billion in 2024 can largely be attributed to the escalating demand for AI technologies. As companies and cloud providers continue to explore innovative hardware solutions to meet their burgeoning workloads, the future looks promising for both component manufacturers and the broader technology sector. For those looking to invest, understanding the shifting dynamics and identifying the right technologies will be critical in navigating this rapidly evolving landscape.

For further insights and data regarding the industry, Dell'Oro Group's comprehensive reports offer essential information for making informed decisions. Contact Dell'Oro Group to acquire detailed insights on market trends, pricing, and forecasts.