Higher prices can't crimp server sales as AI drives demand

While high memory costs have hurt PC shipments, the server market continues to grow as AI infrastructure spending spreads beyond hyperscalers to corporate and government buyers.

According to market intelligence firm IDC, the second quarter was a bumper one for the server sector, with vendor revenue reaching an all-time high of $166.3 billion.

That was a 52 percent increase from the same period last year.

The picture for servers therefore differs from that for laptops and desktops.

There, unit shipments have fallen as buyers are discouraged by higher prices, driven by shortages of memory components.

Yet higher prices have helped larger vendors sustain their revenue.

In contrast, server shipments increased by 15.4 percent year-on-year in Q2, despite average selling prices being pushed up by elevated memory pricing and continued supply issues with other components.

IDC said average selling prices increased across both GPU-accelerated and non-accelerated systems.

Average selling prices for GPU-accelerated servers rose by nearly 44 percent to $170,200, even as GPU unit shipments fell 10.8 percent year-on-year.

For non-accelerated systems, average pricing was up by more than 33 percent to nearly $13,000.

AI infrastructure investment from hyperscalers and large cloud providers remains the largest source of demand, IDC observes.

GPU-accelerated servers for the AI market made up nearly 53 percent of total revenue during Q2.

However, it also says that AI server adoption is broadening beyond the largest players into enterprise and government-directed deployments across a growing number of countries, a policy and capex-driven layer of demand that is largely insulated from near-term commercial budget cycles.

"The notable shift in the server market this quarter is in who is now buying," said Kuba Stolarski, IDC research vice president for Computing Platforms and Service Provider Infrastructure.