Austin, Texas, USA, January 16, 2025
- Futurum’s recently released update on the AI Processor and Accelerator market provides data, analysis, and insight on a market that continues to see quarter-on-quarter sequential growth driven by heightened demand for AI-powered solutions.
- GPUs are the dominant product type, accounting for 85.7% of the $22.9B in 3Q 2024 revenue, which was an increase of 21.7% quarter over quarter.
- NVIDIA and AMD continued their strong performance in the space by capitalizing on the growing demand for their NVIDIA H100, H200, AMD Instinct, and EPYC processors.
The data center industry has witnessed a period of exponential growth over the past decade, primarily driven by the burgeoning cloud computing sector. Leading cloud providers, including Amazon, Google, Meta, Microsoft, Apple, Alibaba, and ByteDance, have significantly increased capital expenditures, fueling the expansion of hyperscale data centers on a global scale. This substantial investment trajectory is poised to exert a significant positive influence on the market for AI processors and accelerators in the foreseeable future.
The AI chipset market for data centers witnessed robust growth and innovation in Q3 2024, driven by record-breaking revenues and a surge in technological advancements (see Figure 1).
Figure 1: Data Center Spending on AI Processors and Accelerators 1Q-3Q 2024
Key highlights from the report include:
Leading competitors
- NVIDIA reported $31 billion in Compute and Networking revenue, representing a 17% sequential and 112% year-over-year increase. This growth was bolstered by the expanded availability of NVIDIA Hopper H200-powered instances on major cloud platforms, including AWS, Azure, and Google Cloud.
- AMD demonstrated its competitive edge with the launch of the EPYC 9005 series processors and the Instinct MI325X accelerators, setting new standards for energy efficiency and demanding AI workloads. The company also strengthened its position through strategic acquisitions, including the completed purchase of Silo AI to enhance model development on AMD hardware.
- Intel made significant strides with the introduction of its latest Xeon processors and Gaudi 3 AI accelerators. The new Xeon processors doubled the performance of their predecessors, with enhanced core counts, memory bandwidth, and embedded AI acceleration. Gaudi 3 accelerators showcased improvements in networking and memory bandwidth, optimized for large language models.
Demand Drivers
- The escalating demand for real-time insights and automated processes is driving substantial investment in specialized AI hardware. For instance, video and audio analytics, critical for applications such as security surveillance and customer experience management, are increasingly reliant on AI processors optimized for high-throughput inference.
- Similarly, simulation and modeling, crucial for sectors such as autonomous vehicle development and climate research, necessitate accelerators capable of executing complex mathematical computations with high efficiency.
- Text analysis and natural language generation, widely adopted in conversational AI platforms and automated customer support systems, are significantly advanced by transformer-based architectures such as GPT.
- Predictive analytics, a cornerstone for industries such as finance, healthcare, and retail, leverages accelerators to expedite decision-making processes by efficiently processing vast datasets.
- The growing emphasis on energy efficiency, latency reduction, and scalability underscores the critical need for AI-specific hardware within data centers, thereby shaping future investment trajectories and technological innovations in this domain.
“Q3 results demonstrate further growth in the demand for AI processors and accelerators within the data center market” said Richard Gordon, Futurum’s Vice President & Practice Lead for Semiconductors. “Driven by the increasing adoption of AI in Large Language Models (LLMs) and Machine Learning (ML) applications, we foresee a further surge in purchasing activity for these technologies in coming quarters,” he added.
Futurum clients can read more in the report “Q3 2024 AI Processors and Accelerators for Data Center SpotCheck Report.”
About Futurum Intelligence for Market Leaders
Futurum Intelligence’s Semiconductor service provides actionable insight from analysts, reports, and interactive visualization datasets, helping leaders drive their organizations through transformation and business growth. Additional information is available at https://app.futurumgroup.com/.
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Futurum clients can read more about it in the Semiconductors Portal. Nonclients can learn more here: Semiconductors Practice.
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Author Information
Richard Gordon is Vice President & Practice Lead, Semiconductors for The Futurum Group. He has been involved in the semiconductor industry for more than 30 years, first in engineering and then in technology and market research, industry analysis, and business advisory.
For many years, Richard led Gartner's Semiconductor and Electronics practice, building a 20-person global team covering all aspects of semiconductor industry research, from manufacturing to chip markets and end applications. Having served on Gartner's Senior Research Board and as Gartner's Chief Forecaster, Richard has extensive experience in developing and implementing methodologies for market sizing, share and forecasting, to deliver data, analysis and insights about the competitive landscape, technology roadmaps, and market growth drivers.
Richard is a sought-after technology industry analyst, both as a trusted advisor to clients and also as an expert commentator speaking at industry events and appearing on live TV shows such as CNBC.