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Barclays bumps AI server revenue forecasts

Barclays bumps AI server revenue forecasts

  • 19.03.2025 12:12
  • ng.investing.com
  • Keywords: AI

Barclays raised its AI server revenue forecasts, projecting $214 billion in 2025 and $292 billion in 2026, driven by hyperscaler investments. The bank expects strong AI growth alongside gradual traditional server recovery, with both markets set to expand in the coming years.

SMCI ProductsBCSsentiment_satisfiedDELLsentiment_dissatisfiedDOCsentiment_satisfied

Estimated market influence

Barclays

Barclays

Positivesentiment_satisfied
Analyst rating: Buy

Barclays raised its AI server revenue forecasts and provided detailed financial projections for the AI server market.

Dell

Dell

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Dell’s AI server revenue fell short last quarter due to the Blackwell transition, but maintains a $9 billion AI server backlog.

HPE

HPE

Positivesentiment_satisfied
Analyst rating: Buy

HPE posted $900 million in AI server revenues last quarter, slightly below Barclays’ estimate, with traditional server revenue growing 16% year-over-year.

Supermicro (SMCI)

Neutralsentiment_neutral
Analyst rating: N/A

Supermicro remains an early mover in AI servers but Barclays has a neutral rating due to competitive positioning and governance concerns.

Context

Business Insights and Market Implications

  • AI Server Revenue Forecast Update: Barclays raised its AI server revenue estimates to $214 billion in 2025 (up from $204 billion) and $292 billion in 2026 (up from $254 billion).
  • Growth Rates: The revised growth projections are 51% for 2025 and 37% for 2026, up from previous estimates of 46% and 25%, respectively.
  • Hyperscaler Capital Expenditure (Capex): Continued strength in hyperscaler capex and technical infrastructure investments are driving the upward revisions.
  • Traditional Server Recovery: Traditional server revenues are expected to recover gradually, with mid-single-digit to high-single-digit growth projected for 2025-26, supported by improving enterprise demand.

Company-Specific Insights

  • Dell Technologies:

    • AI server revenue fell short last quarter due to the Blackwell transition.
    • Maintains a $9 billion AI server backlog.

  • Hewlett Packard Enterprise (HPE):

    • Posted $900 million in AI server revenues last quarter, slightly below Barclays’ $1 billion estimate.
    • Traditional server revenue grew 16% year-over-year, indicating early signs of enterprise recovery.

  • Supermicro (SMCI):

    • Remains an early mover in AI servers but faces challenges such as weaker competitive positioning, high working capital requirements, and governance concerns.
    • Barclays maintains an Equal-Weight rating on the stock.

Market Dynamics

  • AI vs Traditional Servers: The server market is bifurcated, with AI growth diverging significantly from traditional server growth over the past few years.
  • Long-Term Outlook: Barclays expects both AI and traditional servers to contribute to market growth in 2025-26.

Strategic Considerations

  • Enterprise Recovery: Macroeconomic uncertainties may push further enterprise recovery into CY26, according to Barclays’ analysis.
  • Competitive Landscape: The competitive dynamics are shifting as hyperscalers and traditional server manufacturers adapt to the growing demand for AI infrastructure.