AI Accelerators & HBM Market to Soar: $446B & $130B by 2029
The global data center accelerator market is poised for an unprecedented surge, projected to reach a staggering $446 billion by 2029. This explosive growth positions accelerators as the single largest driver of capital expenditure within data centers, now accounting for approximately one-third of total spending, according to a recent report by Dell’Oro Group.
The underlying force behind this expansion is the relentless proliferation of artificial intelligence workloads and the subsequent buildout of specialized infrastructure designed to support them. Baron Fung, Senior Research Director at Dell’Oro Group, highlights that the entire worldwide data center IT semiconductor and component market is expected to achieve a robust 26 percent compound annual growth rate over the next five years.
At the epicenter of this growth cycle are AI accelerators, encompassing both widely available merchant GPUs and increasingly prevalent custom-designed silicon. These powerful components are critical enablers for a diverse array of AI and domain-specific applications. Hyperscale cloud providers, in particular, are making significant investments in custom accelerators, seeking to optimize performance and reduce operational costs. Concurrently, substantial engineering efforts are underway across the industry, focused on enhancing accelerator performance per watt, a crucial metric, from the individual chip level all the way up to the complete rack.
Supporting technologies are also experiencing accelerated demand. High Bandwidth Memory (HBM), essential for feeding data-hungry AI chips, is seeing remarkable growth, with its revenue forecast to exceed $130 billion by 2029. Notably, HBM revenue is outpacing that of accelerators themselves, driven by the escalating memory content required per chip to handle complex AI models. In parallel, the demand for high-speed network adapters is soaring. These adapters are vital for enabling seamless, rapid accelerator-to-accelerator connectivity within the vast, scale-out networks that characterize modern AI compute clusters. The Ethernet network adapter market, specifically for these back-end networks, is projected to grow at an astonishing 59 percent compound annual growth rate by 2029.
While merchant GPUs continue to dominate revenue streams, the landscape is shifting dramatically in terms of adoption. Custom accelerators are anticipated to account for half of all accelerator shipments by 2029, underscoring the strategic shift by major players towards tailored solutions. This comprehensive market expansion reflects an industry rapidly retooling itself to meet the insatiable computational demands of artificial intelligence, creating a dynamic ecosystem where chips, memory, and networking solutions are all experiencing unprecedented growth.