The server market grew by 89.0% in spending in the fourth quarter of 2024, and by 73.5% for the year, driven by the continued mass deployment of GPU servers by hyperscalers and other large IT buyers. Non-accelerated server growth continued to recover, and overall unit growth was strong at 16.9% year over year. An aging installed base and pent-up demand have helped drive the 2024 recovery and market expansion, and the launch of new generation processors late in 2023 is contributing to this cycle as well, as the tech transition to new CPU platforms has been in full force during 2024. Large cloud service providers will continue their accelerated infrastructure expansion throughout the forecast period, while the rest of the market will try to find a balance for AI investments between on premises deployments and cloud services.

The market is expected to grow over the next five years at 16.3% CAGR by 2029. The macroeconomic environment will continue to be a defining factor for market performance through 2025, with last year’s optimism being replaced by uncertainty surrounding tariffs and other policy changes. DeepSeek’s market impact has been eased as they needed more infrastructure than was initially reported, and the evolution from simple chatbots to reasoning models to agentic AI will require several orders of magnitude more processing capacity, especially for inferencing. So even though the raise of more efficient models will require fewer resources, the market still will be growing at double digit pace as the new use cases are still underserved by current infrastructure.