AI Deployments Driving Revenue Growth in Data Center Physical Infrastructure Market
The demand for data center physical infrastructure is evolving as the growth from pandemic-induced orders begins to wane. However, a new trend is emerging with early AI deployments becoming a significant driver of revenue growth. Some vendors are now securing orders for equipment optimized for large-scale AI workloads, which are offsetting the decline in pandemic-related orders and leading to an increase in backlogs.
According to Lucas Beran, Research Director at Dell’Oro Group, the introduction of the NVIDIA H100 in 1Q 2023 marked a significant milestone in AI adoption within the industry. End-users have made significant investments to acquire the costly and supply-constrained GPU, with many focusing on addressing power and thermal management infrastructure requirements only after receiving the initial GPU shipments.
As a result, AI-related power and cooling investments have started contributing to market growth, particularly in the realm of rack power distribution units. Customized products with higher power ratings have become increasingly popular, signaling a shift in market drivers from pandemic-induced digitalization to purpose-built AI facilities.
Key Highlights from the 3Q 2023 Data Center Physical Infrastructure Report:
- Vertiv has outpaced market growth and gained over 2 percentage points of market share in 3Q 2023.
- The fastest-growing regions in 3Q 2023 were North America, Asia Pacific (excluding China), Europe, and the Middle East and Africa (EMEA), with double-digit growth rates. Caribbean and Latin American (CALA) revenues saw high single-digit growth, while the China market experienced a decline.
- Thermal Management and Power Distribution were the fastest-growing product segments.
Looking ahead, market growth in the data center physical infrastructure sector is expected to moderate in 2024 as pandemic-induced orders are fulfilled. However, growth rates are projected to remain above historic levels as AI deployments continue to materialize throughout the year.
With AI deployments driving revenue growth in the data center physical infrastructure market, companies are adapting to meet the evolving needs of end-users. As the industry continues to innovate and optimize for AI workloads, the future of data center infrastructure looks promising.
