Market Note: Servers
The global server market is experiencing robust growth in 2024, with particularly strong demand in the third quarter. According to IDC, worldwide server market revenue grew by 64.1% year-over-year in Q2 2024, driven primarily by increased shipments of GPU-accelerated servers for AI workloads. This trend is expected to continue into Q3, with TrendForce projecting AI server shipments to increase by nearly 20% quarter-over-quarter. The surge in AI server demand is reshaping the market landscape, with AI servers forecast to account for 65% of total server market value in 2024, reaching $187 billion.
Regional dynamics show North America maintaining its dominant position, while Asia Pacific emerges as the fastest-growing market. North American cloud service providers (CSPs) are driving significant demand as they expand their AI infrastructure. Meanwhile, the Asia Pacific region is seeing increased investments in data centers and cloud infrastructure, with IDC forecasting 14.2% CAGR growth in data center IT power capacity through 2028. China's server market is particularly noteworthy, with a projected CAGR of 19% from 2024-2030 despite facing export restrictions.
Key drivers of server market growth include the proliferation of AI and machine learning applications, ongoing cloud computing expansion, and the deployment of edge computing solutions. The rollout of 5G networks is also contributing to increased server demand. Additionally, many enterprises are undertaking hardware refresh cycles, updating aging infrastructure to meet the demands of modern workloads. These factors are combining to create a robust demand environment across various server segments.
Supply chain dynamics are playing a crucial role in market performance. The resolution of previous constraints has allowed for increased production and shipments, helping to meet pent-up demand. However, the surge in demand for specialized components like high-bandwidth memory (HBM) for AI servers is creating new supply challenges. Major memory suppliers report that their HBM supply is fully allocated through most of 2025, potentially impacting the availability and pricing of AI-optimized servers.
Looking ahead to the remainder of 2024 and beyond, the server market is poised for continued strong performance, particularly in the high-performance computing (HPC) and GPU-accelerated segments. Gartner estimates that end-user spending on servers will reach $151 billion in 2024, representing a 12% year-over-year increase. However, the market faces potential headwinds from global economic uncertainties and geopolitical tensions that could impact supply chains or dampen enterprise IT spending. Vendors and customers alike will need to navigate these challenges while capitalizing on the opportunities presented by the ongoing AI revolution and digital transformation initiatives.
Sources:
IDC (International Data Corporation)
Worldwide server market revenue growth of 64.1% year-over-year in Q2 2024
Forecast of 14.2% CAGR growth in Asia Pacific data center IT power capacity through 2028
TrendForce
Projection of AI server shipments increasing by nearly 20% quarter-over-quarter in Q3 2024
Forecast of AI servers accounting for 65% of total server market value in 2024, reaching $187 billion
Gartner
Estimate of end-user spending on servers reaching $151 billion in 2024, a 12% year-over-year increase
DIGITIMES
Information on global server shipments and market trends
Reuters
Reporting on major tech companies' financial results and market performance
Various Tech Company Earnings Reports and Press Releases
Dell Technologies, Hewlett Packard Enterprise, Micron Technology, and others providing insights on server and component demand
Industry Analysis Reports
Unspecified reports providing data on regional market shares and growth rates, particularly for North America and China
Market Research Firms (unnamed)
Providing data on server market segmentation and growth forecasts