“While recent developments like DeepSeek have highlighted concerns over the sustainability of recent expenditures, the cloud service providers are undergoing a multi-year capex cycle to support larger LLMs and expand AI services, broadening use cases…” said Baron Fung, Senior Research Director at Dell’Oro Group.

With a strong growth expected in front-end networks and an exceptional performance in back-end networks tracked in our ‘AI Network for AI Workload’ report, Ethernet data center switch sales could surpass $180 billion over the next five years (2025-2029).

“We project that data center infrastructure spending could surpass $1 trillion annually within five years. While AI spending has yet to meet desired returns and efficiency improvements, long-term growth remains assured, driven by hyperscalers’ multi-year capex cycles and government initiatives such as the $500 billion Stargate Project,” said Baron Fung, Senior Research Director at Dell’Oro Group.

The proliferation of accelerated computing to support AI and ML workloads has emerged as a major DCPI market driver which is significantly increasing data center power and thermal management requirements.