Global AI Server Market By Server (AI Data, AI Training, AI Inference, Others), By Hardware (GPU, ASIC, FPGA, Others), By Industry (IT & Telecom, BFSI, Retail, Healthcare, Manufacturing, Others), Region and Companies – Industry Segment Outlook, Market Assessment, Competition Scenario, Trends and Forecast 2024-2033

Report Overview

The Global AI Server Market size is expected to be worth around USD 430 Billion by 2033, from USD 31 Billion in 2023, growing at a CAGR of 30.3% during the forecast period from 2024 to 2033.

An AI server refers to a type of hardware platform or server environment designed specifically to handle artificial intelligence (AI) tasks. These servers are equipped with specialized processors and software to manage and process AI workloads effectively. The key features of an AI server include high-throughput processing capabilities, large amounts of memory, and advanced GPU (Graphics Processing Unit) architectures.

The global AI server market is experiencing significant growth, driven by the increasing adoption of AI technologies across various sectors such as healthcare, finance, automotive, and IT services. This market encompasses the sale of server systems optimized for AI tasks, including both hardware and software components. Key factors contributing to the market expansion include advancements in AI and machine learning algorithms, the surge in data volume, and the need for more powerful computational processing to handle complex AI tasks.

In terms of popularity, AI servers are becoming increasingly favored in industries such as healthcare, automotive, finance, and retail. The integration of AI servers facilitates enhanced decision-making, predictive analytics, and automated operations within these sectors. Their ability to provide substantial computational resources and support for AI algorithms makes them integral to the development and deployment of AI applications.

Market expansion for AI servers is projected to continue robustly. This expansion is supported by continuous advancements in server architecture, such as improvements in processing speeds, energy efficiency, and integration with cloud computing environments. Furthermore, as AI technology evolves and becomes more sophisticated, the requirement for specialized AI servers that can support new and emerging AI models is expected to propel the market growth globally.

AI software companies manage the operating system, drivers, resource planning, anomaly detection, and visualizing system monitoring to further optimize AI server performance. According to the research paper of Science Direct, around 75% of the data generated by businesses is created and processed outside the conventional data center due to the expansion of AI servers.

For instance, In November 2023, KX introduced the KDB.AI Server Edition, a high-performance, scalable vector database specifically designed for time-oriented generative AI and contextual search. This new release aims to address the challenges enterprises face in scaling AI applications, which is a common issue as reported by 76% of global C-suite executives according to a recent Accenture study​.

However, the market faces several challenges. High costs associated with advanced AI servers can be a barrier for small and medium enterprises. Also, there is a need for skilled professionals who can manage and operate these AI systems effectively. Ensuring the security of AI servers is another critical challenge, as they often process sensitive information.

Despite these challenges, there are significant opportunities in the AI server market. The increasing adoption of AI in areas like healthcare, finance, and automotive industries presents vast potential for growth. Additionally, the development of energy-efficient AI servers offers a chance to attract environmentally conscious companies looking to reduce their carbon footprint.

According to a recent survey, AI servers comprised approximately 23% of the total server market in 2023, reflecting a significant presence in the industry. This share is anticipated to grow substantially in the coming years as the demand for AI-driven solutions continues to rise. Notably, AI servers are priced at approximately 15 to 20 times higher than traditional servers used by cloud service providers, underscoring the premium value and advanced capabilities they offer

Key Takeaways

• The AI server market is likely to reach USD 430 billion in the year 2033 with a CAGR of 30.03% during the forecast period 2024-2033.
• By segmented based on servers, the AI training segment has contributed towards the largest market share with a total share of 39% in the year 2023.
• On segmenting based on hardware, the GPU segment has accounted for the largest market share of 56% in the year 2023.
• The IT and telecom industrial segment has registered the largest market share of 28% in the year 2023.
• On segmenting based on regions, the North America region has the largest market share of 33% in the year 2023.

By Server Analysis

In 2023, the AI Training segment held a dominant position in the AI server market, capturing more than a 39% share. This segment leads primarily because AI training involves complex computational processes that require robust and specialized hardware.

AI training servers are designed to handle these demands, providing the necessary power to train machine learning models effectively. These models are foundational for developing AI applications that can perform tasks ranging from image recognition to autonomous driving.

The substantial lead of the AI Training segment can also be attributed to the increasing sophistication of AI applications. As AI technologies evolve, the complexity and size of datasets used for training these models also increase. This requires more powerful servers that can accelerate the training process, reducing the time from development to deployment.

The high demand for improved AI capabilities across industries such as healthcare for drug discovery, automotive for developing self-driving systems, and finance for real-time fraud detection reinforces the need for advanced AI training servers.

Moreover, the ongoing research and development in AI and machine learning algorithms drive continuous improvements in AI training servers, making them even more efficient and capable. This not only sustains their market dominance but also opens up more opportunities as businesses seek to leverage AI for competitive advantage. As such, the AI Training segment is not just leading but also shaping the future directions of the AI server market, emphasizing its pivotal role in the broader tech landscape

By Hardware Analysis

In 2023, the GPU segment held a dominant position in the AI server market, capturing more than a 56% share. GPUs, or Graphics Processing Units, have become integral to AI server architectures due to their ability to handle parallel tasks efficiently, which is crucial for training AI models and processing large datasets.

This capability makes them particularly suited for intensive computational tasks such as deep learning and neural network processing, where they can perform multiple calculations simultaneously, drastically reducing processing time compared to traditional CPUs. The leadership of the GPU segment is further reinforced by continuous advancements in GPU technology.

Manufacturers like NVIDIA and AMD are at the forefront, developing GPUs that are not only faster but also more energy-efficient and capable of handling increasingly complex algorithms and larger data volumes. These improvements are vital as AI applications become more intricate and widespread across various industries, including gaming, professional graphics, automotive, and data centers.

Moreover, the ecosystem supporting GPU development is robust, featuring extensive software libraries and frameworks that facilitate easier integration into AI systems. This compatibility reduces development times and enhances the versatility of GPUs, making them the preferred choice for companies looking to implement AI solutions rapidly and efficiently. Thus, the GPU segment continues to lead and expand within the AI server market, driven by technological advancements and broad industry adoption.

By Industry Analysis

In 2023, the IT & Telecom segment held a dominant market position within the AI server market, capturing more than a 28% share. This leading role is primarily driven by the critical need for advanced data processing capabilities in IT and telecommunications. The surge in data traffic and the increasing complexity of network infrastructure demand robust AI-driven solutions to optimize operations, enhance service delivery, and reduce downtime.

AI servers are integral in managing and analyzing vast quantities of data in real time, enabling telecom operators to improve customer experience through personalized services and predictive maintenance. Furthermore, the IT & Telecom industry is at the forefront of adopting new technologies such as 5G, IoT, and edge computing, which require substantial computational power and advanced analytics that AI servers provide.

These technologies enhance the capability of networks to handle high-speed data and support the massive deployment of IoT devices. AI servers assist in network function virtualization and software-defined networking, making networks more flexible and efficient. The need to maintain competitiveness and manage expanding network architectures ensures continuous investment in AI technology, reinforcing the IT & Telecom segment’s lead in the AI server market.

This trend is supported by ongoing innovations and partnerships among major tech companies aiming to develop more sophisticated AI solutions that cater specifically to the needs of the IT & Telecom sector. As AI technology evolves, it promises to unlock even more potential within this segment, driving further growth and efficiency improvements. Thus, the IT & Telecom sector’s dominance in the AI server market is not only a reflection of current demands but also an indicator of strategic positioning for future technological integrations.

Key Market Segments

By Server Type

• AI Data
• AI Training
• AI Inference
• Others

By Hardware Type

• GPU
• ASIC
• FPGA
• Others

By Industry Type

• IT & Telecom
• BFSI
• Retail
• Healthcare
• Manufacturing
• Others

Drivers

Growing demand for AI-based solutions in different industries

The AI Server market has grown as a result of various factors, including the growing use of artificial intelligence (AI) and machine learning (ML), supportive government regulations, advancements in GPU technology, increased R&D, the incorporation of AI into autonomous systems, and an increase in the number of people using big data analytics.

Businesses in various sectors such as IT, manufacturing, and others are realizing the importance of AI and ML technologies in terms of decision-making, process optimization, and competitive advantage. Large amounts of data are created and analyzed by enterprises, which has increased the demand for powerful computer capacity. AI servers are essential for fulfilling these processing demands since they are equipped with high-performance hardware and accelerators like GPUs and TPUs.

Due to the complexity of AI and ML algorithms, particularly when it comes to deep neural network training, specialized infrastructure with complicated computation and parallel processing capabilities is needed in the system. Therefore, as businesses invest in effective and scalable solutions to deploy, manage, and accelerate AI workloads, the market for AI servers is expanding.

Restraints

Lack of skilled workforce hampers the market growth

Since artificial intelligence is complex, firms that aim to create, manage, and implement artificial intelligence systems need to have a highly qualified workforce. Knowledge & hands-on experience with technologies like cognitive computing, machine learning (ML), deep learning, and image identification are essential for experts working with AI systems.

Furthermore, it is challenging for small enterprises to invest in R&D and patent applications to integrate Al technology into current systems. In addition, small errors might cause system malfunctions which can have a big impact on the intended outcomes.  Additionally, as the need for customized AI processors with the help of ML is increasing, the requirement of experts including data scientists and developers is also increasing.

Companies in all sectors are implementing new technology to boost productivity and operational effectiveness, cut waste, protect the environment, and swiftly expand into untapped markets and customer bases quickly and conveniently while supporting process and product innovation.

Opportunities

Edge AI offers an attractive opportunity for market growth

The market for AI servers is expected to expand significantly due to its increasing use in various industries. AI server providers are booming due to the increasing demand for processing power to handle advanced AI algorithms. The need for AI servers, which allow for real-time data processing at the network edge, is also being driven by edge computing.

Additionally, there is a growing need for specialized hardware that is optimized for AI workloads as AI technologies like machine learning and deep learning are incorporated into routine tasks. As a result, the environment is more favorable for AI server providers to develop and satisfy the expanding demands of AI-based enterprises, encouraging growth and competitiveness in the market.

Challenges

Data security and privacy concern

However, there are several challenges impeding the market’s growth, including concerns about data security and privacy, the complexities of AI algorithms, and a lack of expertise. A significant obstacle to the market for AI servers is privacy and data security concerns, which keep the technology away from being widely adopted.

Large volumes of sensitive data are rapidly being used by AI systems for training and decision-making, which raises severe concerns about this data’s susceptibility. The use of AI server solutions carries a risk of exposing sensitive data to online attacks, which can cause businesses serious financial and reputational harm.

Latest Trends

Recent developments in the technology

The AI server market is anticipated to expand rapidly during the forecast period due to several recent developments, including edge computing for AI, the rising need for explainable AI (XAI), AI as a service (AIaaS), and its wide range of uses for AI capabilities. The adoption rate of AI and AI cloud services is strong in different regions of the globe.

One of the notable trends that is changing the AI server business is edge AI computing. In contrast to conventional centralized AI server designs, Edge AI does not exclusively rely on remote servers; it also processes data locally on the device. Rapid processing is crucial in applications like smart sensors, IoT devices, and autonomous cars, which are effectively performed by edge AI. The demand for smaller, more effective, power-optimized servers to handle edge deployments has resulted in this trend.

Regional Analysis

North America is leading the global AI server market

The North America region has attributed to the largest market share in the year 2023 with a share of 33%. This is due to its advanced technological landscape, large investments, and concentration of top technology businesses.

For instance, the US has a significant impact on the advancement and use of AI servers. Advanced AI infrastructure is increasing in demand in North America due to competitive domains like social media, e-commerce, and automated vehicles. AI servers are used by businesses in different areas and for several purposes, such as developing sophisticated machine learning models for recommendation systems and handling natural language in customer support.

In addition, the integration of 5G, IoT (Industrial Internet of Things), and cutting-edge technologies inside a cloud ecosystem also emphasizes the critical role that cloud services play in determining the future of the AI server market.

Asia Pacific region is expected to experience the highest CAGR

The APAC region is expected to register for the highest CAGR due to the increasing use of cloud systems. As companies look for more flexibility and resilience, APAC is predicted to have a higher demand for cloud services as compared to the other regions of the globe. The percentage of IT investment allotted to the cloud has increased noticeably in these regions. The APAC region’s expanding AI server market is largely being driven by China, Japan, and India. These areas have a variety of economies, each of which supports the deployment of AI servers according to particular requirements.

Key Regions and Countries

North America

• US
• Canada

Europe

• Germany
• France
• The UK
• Spain
• Italy
• Russia
• Netherlands
• Rest of Europe

Asia Pacific

• China
• Japan
• South Korea
• India
• Australia
• Singapore
• Thailand
• Vietnam
• Rest of APAC

Latin America

• Brazil
• Mexico
• Rest of Latin America

Middle East & Africa

• South Africa
• Saudi Arabia
• UAE
• Rest of MEA

Market Share and Key Players Analysis

The market for AI servers is extremely competitive, and businesses are continuously coming up with new ideas to boost workload scalability, power efficiency, and performance. Partnerships and new competitors can also alter market dynamics.

Advancements in technology, strategic alliances, and market trends affecting the adoption of AI and ML in numerous industries are influencing the competitive landscape for the market. Businesses across the globe are actively participating in this competitive environment to offer solutions that address the evolving requirements of AI-based applications.

Top Key Players in the Market

• ADLink Technologies
• Dell Technologies
• Hewlett Packard Enterprise
• Huawei Technologies
• IBM Corporation
• NVIDIA Corporation
• Aivres
• Super Micro Computer, Inc.
• ZTE Corporation
• Other Key Players

Recent Developments

• In March 2024, NVIDIA launched the Blackwell GPU Platform that helps in computing, data processing, electronic design automation and various other activities.
• In January 2024, Deloitte launched a new Gen AI powered solution on RelativityOne and Relativity servers to help firms manage the employees’ concerned activities such as employee investigation, document review, and others.

Report Scope