Global spending on servers is experiencing an unprecedented surge, driven by soaring demand for AI infrastructure, high-performance computing, and cloud services.
Server market revenues soared to $95.2 billion in the first quarter of 2025 — an all-time high — marking a record-breaking 134.1 percent increase compared to Q1 2024. This momentum has pushed the full-year market projection to $366.0 billion for 2025, a 44.6 percent increase over 2024, according to IDC’s Worldwide Quarterly Server Tracker.
A significant share of this growth stems from investment in x86 servers, expected to reach $283.9 billion in 2025, up 39.9 percent year-over-year. Meanwhile, non-x86 servers are projected to grow even faster, expanding by 63.7 percent to $82.0 billion. The server market is seeing a transformation in architecture, with servers equipped with embedded GPUs growing 46.7 percent annually and accounting for nearly half the total market value this year.
A major growth driver has been the adoption of AI-optimized infrastructure by hyperscalers and cloud service providers. ARM-based servers, benefiting from the deployment of large rack-scale configurations, are gaining rapid traction with 70.0 percent annual growth and will account for 21.1 percent of global shipments in 2025, IDC report said.
The sector’s expansion is also being shaped by landmark initiatives like the Stargate project, which pledged up to $500 billion in AI infrastructure spending. Although newer AI models such as DeepSeek’s R1 have introduced more efficient reasoning capabilities, their real-world deployment still demands massive compute infrastructure — especially for inferencing.
According to IDC’s Kuba Stolarski, the industry’s shift from chatbots to reasoning models and agentic AI will require exponential increases in processing power, reinforcing the need for continued server investment.
Regionally, the United States is leading the surge in server spending, with revenue growth of 59.7 percent year-over-year and contributing nearly 62 percent of total global revenue in 2025. China follows with 39.5 percent growth, accounting for over 21 percent of global quarterly revenue.
Other regions, including Japan (33.9 percent) and APeJC (10.8 percent), also show solid expansion. In contrast, EMEA and Latin America are growing modestly at 7.0 percent and 0.7 percent, while Canada shows a decline of 9.6 percent due to a one-off large transaction in 2024.
Server vendor activities
Server vendors are actively responding to surging enterprise and hyperscaler demand with competitive pricing strategies, promotional offers, and innovation-driven product refreshes.
Top vendors including Dell Technologies, HPE, Lenovo, and Supermicro have introduced updated server lines leveraging the latest Intel Xeon 6 and AMD EPYC 9004 series processors, offering significantly higher core densities and improved power efficiency.
Vendors are also bundling servers with advanced liquid cooling options and AI-ready configurations optimized for NVIDIA’s latest GPUs to address growing demand for AI workloads.
Price promotions are emerging across entry-level and mid-range servers, particularly in emerging markets, as vendors seek to expand their installed base. At the same time, channel partners are offering deferred payment schemes and trade-in programs to encourage hardware refresh cycles.
Innovations in server form factors, modularity, and green computing are also gaining traction, with players like Lenovo and HPE touting energy-aware systems integrated with their respective management software stacks. These combined efforts aim to enhance performance-per-dollar while enabling enterprises to manage costs and power consumption amid ongoing data center expansion.
Rajani Baburajan
