Americas Communications Technology: Expert Network Series: Data center outlook with Dell'Oro

Bottom line: AI infrastructure investments continue to be justified through capability developments rather than returns, and that likely will continue to be the case for the next several years. Data center capacity likely will increase ~200GW over the next 5 years to ~250GW by 2030, with on-site generation becoming more critically important over time. Within networking, ANET is among the best positioned in scale-across networks, while CLS and HPE likely will lead in scale-up networks; CSCO has shown impressive progress in scale-out. Key takeaways: Scale up represents net new TAM opportunity for networking vendors — Dell'Oro believes scale-up represents largely net-new networking TAM rather than a substitution within existing data center spending, with vendor success dependent on both liquid-cooled switch capabilities and deep rack-level integration;