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CONTEXT, a market intelligence firm, has forecast significant growth for server revenues and expressed a more cautious outlook for storage and networking in the fourth quarter of 2024.
Gurvan Meyer, Business Analyst at CONTEXT, stated, "Server revenue sales exceeded expectations in Q3 2024, growing by 22.9% year-on-year, driven by strong AI server platform demand. Generative AI infrastructure investments are reshaping the market, with AI server platforms now commanding 13.5% of the server market share, up from just 1% last year. This growth, combined with renewed distributor sales to large corporate resellers, is creating positive momentum for the server market."
The company predicts server revenue growth to decelerate slightly to 7.2% year-on-year in Q4, while projecting an overall strong full-year growth figure of 8.8%. CONTEXT notes that geopolitical challenges and extended AI sales cycles could potentially temper growth prospects in the near term.
On the storage market front, Meyer remarked, "While we forecast modest growth in enterprise flash prices and demand from large enterprises in Q4 2024, the overall storage market continues to face challenges." The Hyperconverged Infrastructure (HCI) segment displayed disappointing results, with revenues declining 20% year-on-year. CONTEXT expects the overall storage market to achieve a minimal revenue growth of 1.2% year-on-year for 2024, suggesting limited impact from AI on external enterprise storage demand in the immediate future.
The enterprise networking sector also faced difficulties, experiencing a significant year-on-year decline of 22.8% in Q3 2024. Still, CONTEXT indicates a slight recovery in Q4, with a quarter-on-quarter revenue increase of 2.2%. The forecast for Q4 2024 is set at a year-on-year revenue growth of 14.6%, though a full-year decline of 22.2% is anticipated. An improving economic environment might invigorate demand from larger businesses by mid-2025.
CONTEXT's analysis reflects a varied performance within the enterprise infrastructure markets. While AI is bolstering server growth, storage and networking segments face hurdles due to geopolitical uncertainties and market shifts.
