Industry analysis projects data center switch sales for AI infrastructure will exceed $100 billion over five years.
According to the AI Networks for AI Workloads report by Dell'Oro Group, spending on switches deployed in AI back-end networks for accelerated servers is forecast to surpass $100 billion over the next five years from 2025 to 2029. The market was led by Celestica, Huawei, and NVIDIA in 2024, though potential major market shifts are expected to unfold in 2025.
Despite rising concerns about the future of spending on accelerated infrastructure following DeepSeek's recent announcements of its open-source model with significantly fewer resources than its U.S. counterparts, strong demand for high-end accelerators and the infrastructure needed to support them is projected to continue. Sameh Boujelbene, Vice President at Dell'Oro Group, noted that the updated forecast of data center switch sales in AI back-end networks was raised compared to the July 2024 forecast. However, this upward revision favors Ethernet, while the forecast for the InfiniBand portion of the market was reduced.
Ethernet is gaining momentum, driven by both supply and demand tailwinds, as more large-scale AI clusters adopt it as the primary fabric. The growing diversity of accelerators is boosting adoption, with notably even large NVIDIA GPU-based clusters, like xAI's Colossus, being deployed with Ethernet. As a result, Dell'Oro Group has moved up its forecast for Ethernet's crossover with InfiniBand by one year. While Celestica, Huawei, and NVIDIA led the Ethernet segment of the market in 2024, Accton, Arista, Cisco, Juniper, Nokia, and other vendors are expected to gain more traction in 2025, reshaping market dynamics.
The AI Networks for AI Workloads report provides a five-year market forecast on a worldwide basis, segmented by customer type, InfiniBand versus Ethernet, and by port speed, offering in-depth analysis of the use cases that optimize each technology in AI back-end networks as well as the choices made by large Cloud Service Providers.