AI gives the sleeping network switch market a good kick

The long-dormant market for datacenter network switches is booming thanks to AI.

Analyst firm IDC on Wednesday shared numbers from its latest quarterly switch tracker, which recorded $11.7 billion in revenue during the first quarter of 2025, a 32.3 percent year-over-year revenue increase. The firm says that this boom is being driven by growing deployment of "high-bandwidth, low-latency network infrastructure to support AI workloads."

IDC recorded 54.7 percent growth for datacenter switch revenue in the quarter, an acceleration faster than the 32.1 percent growth in 2024's final quarter.

Revenue from 200/400 GbE switches surged 189.7 percent year-over-year in Q1.

IDC also started tracking 800 GbE switches, which raked in $350.8 million, meaning they have quickly come to account for 5 percent of the market.

Among vendors, Nvidia was the big winner, somewhat unsurprisingly as all of its switch revenue coming from datacenters. IDC found that its switch revenue grew "an eye-popping 760.3 percent year-on-year to reach $1.46 billion" and surged 183.7 percent between Q4 2024 and Q1 2025.

Arista's datacenter switch revenue grew 27.1 percent year-over-year to $1.6 billion, but Cisco datacenter switch revenue somehow managed to drop 3.2 percent, suggesting competitors are eating into its business in this red-hot segment. Its overall switch revenues grew 4.7 percent.

Total non-datacenter-related revenue from campus and branch network switches also grew, but by a comparatively tame 9.6 percent.

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IDC also reported on wireless LAN revenue this week and recorded 10.6 percent growth in Q1.

"The market's supply and demand dynamics are stabilizing after two years of volatility driven largely by the drawdown of backlogged product orders stemming from the COVID-19-era global supply chain crisis," the firm found.

Yet again, AI was a factor.

"The fundamentals of the enterprise WLAN market remain strong, however, with exciting innovations such as 6 GHz Wi-Fi and AI-powered management capabilities continuing to power the next-generation of wireless connectivity," said Brandon Butler, senior research manager for Enterprise Networks. ®