Hilo Research河洛投研
Quick Summary
Covering the latest research from top Wall Street investment banks

AI back-end switching drives strong 1Q26 switching market growth, and campus switching demand is steadily improving

Institution
Bank of America
Date
2026-07-14
Authors
Tal Liani; Tomer Zilberman; Kevin Niederpruem; Eden Vacnich
Company
META PLATFORMS INC
Ticker
META.US
Industry
Internet Content & Information; AI; United States Telecom Equipment
Rating
-
BullishLow confidenceSwitching market growth remains strong, led by AI back-end and data center demand, while campus switching is improving on refresh cycles.
AuthorsTal Liani; Tomer Zilberman; Kevin Niederpruem; Eden Vacnich
CoverageOther
Asset classesEquity
Business segmentsCampus Switching、Data Center Switching、Front-End Data Center Switching、AI Back-End Data Center Switching
Research firm divisions/subsidiariesBank of America（Other）、BofA Securities（Other）

AI summary card

AI back-end switching drives strong 1Q26 switching market growth, and campus switching demand is steadily improving

Bank of America sees no signs of deceleration in the switching market; in 1Q26, the total switching market grew 36.1% year-over-year, data center switching grew 50% year-over-year, and AI back-end switching grew 121% year-over-year.

The report does not provide a clear company-specific rating, target price, or rating change; the overall sector view is constructive, with emphasis on the resilience of switching demand driven by AI and cloud infrastructure spending.
SwitchingData CentersAI InfrastructureCloud Provider Capital ExpenditureCampus Network Refresh
  • Data center switching represented 66% of the total switching market in 1Q26, making it the largest subsegment, and was driven by investment from Hyperscalers, Tier-2 Cloud, and NeoCloud.
  • AI back-end data center switching grew 121% year-over-year and accounted for 38% of data center switching demand, up from 26% a year ago.
  • Front-end data center switching grew about 26% year-over-year, while Hyperscaler front-end networking capex grew 51% year-over-year.
  • Campus switching grew 15.1% year-over-year, with underlying growth around 10%-11%; Cisco maintains roughly 53% share in this segment.
  • Cisco's share of Hyperscaler AI back-end switching rose from near zero in 1Q25 to 13.2% in 1Q26, mainly benefitting from penetration of Meta's 800G leaf switch layer.

Report interpretation

Overview

This report tracks 1Q26 global switching market trends. Bank of America stated that total switching grew 36.1% year-over-year, data center switching grew 50% year-over-year, AI back-end switching grew 121% year-over-year, and front-end switching grew 25.6%-26% year-over-year. The growth was driven mainly by sustained investment from Tier-1 and Tier-2 cloud providers in both AI and non-AI infrastructure. The top five hyperscalers are expected to have 2026 capex growth of 85% year-over-year, versus 72% in 2025. Campus switching is also improving, with year-over-year growth of 15.1%, and is meaningful for vendors such as Cisco.

Core views

The core view is: first, data center switching remains the primary growth engine, accounting for 66% of total switching in 1Q26; second, AI back-end switching is cyclical but current data do not show a deceleration in growth; third, AI back-end investment is also pulling front-end switching demand, with both hyperscalers and enterprise customers continuing to invest; fourth, campus switching is supported by product refreshes and equipment refresh cycles, and its growth is above the historical 1%-2% range; fifth, the competitive landscape is shifting, with Arista, Cisco, Celestica, Nvidia, and white-box vendors each seeing share changes across different customers and network layers.

Analysis framework

The report decomposes the market by total switching, campus switching, data center switching, front-end data center switching, and AI back-end data center switching, and further analyzes by vendors and customer type, including Top 4 US Cloud, Tier-2/Neo/Other Cloud, and Total Enterprise. It uses year-over-year and quarter-over-quarter growth, revenue scale, market share, and customer contribution to assess demand strength and changes in competitive dynamics.

Methodology notes

  • Industry market segmentationSegment switching market by network scenario and customer type

    Split the total switching market into campus switching and data center switching, then split data center switching into front-end switching and AI back-end switching, and further analyze by Hyperscaler, Tier-2/Neo/Other Cloud, and enterprise customers.

    This framework helps distinguish the different demand drivers for traditional enterprise network refreshes, cloud infrastructure expansion, and AI cluster buildouts.

  • Share and growth analysisYoY/QoQ and vendor share tracking

    Assess demand strength and competitive positioning by year-over-year growth, quarter-over-quarter changes, and changes in vendor market share.

    The report emphasizes that 1Q26 year-over-year growth better reflects AI and cloud capex-driven demand, while quarter-over-quarter changes are also affected by cloud deployment pace and enterprise seasonality.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

  • Cisco
    Market leader in campus switching and has gained share in Hyperscaler AI back-end switching.
    Strengths
    Approximately 53% share in campus switching; the Catalyst 4000/6000 series EOS may drive refresh demand; Hyperscaler back-end share increased to 13.2%.
    Weaknesses
    Enterprise front-end data center switching share has declined from historical highs, with some share being taken by competitors such as Arista.
    Comparison
    Stronger than Arista and HPE in campus switching; in Hyperscaler back-end switching, now close to Arista and Nvidia at around 13% share.
    Risks
    Cloud customer order pace, white-box competition, enterprise budget seasonality, and timing of product refresh execution.
  • Arista
    Core beneficiary in data center switching and front-end switching, with share gains in Tier-2/NeoCloud.
    Strengths
    Data center switching share rose quarter-over-quarter to 21.1%; front-end switching share around 26.5%; Tier-2/NeoCloud AI back-end share rose from 2% in 1Q24 to 19.1% in 1Q26.
    Weaknesses
    Some Tier-2 front-end switching share declined year-over-year, and total AI back-end share is below Celestica and Nvidia.
    Comparison
    Co-leads front-end data center switching with Cisco; competes with Cisco and Nvidia in AI back-end segments and select customer groups.
    Risks
    Cloud customer purchasing concentration, white-box substitution, and fluctuations in customer capex.
  • Nvidia
    Key vendor in AI back-end switching, benefiting from complete reference designs and AI cluster buildouts.
    Strengths
    Approximately 24.5% total share in AI back-end switching; around 60% share in some enterprise AI back-end segments; strong value proposition in Tier-2/NeoCloud AI back-end.
    Weaknesses
    Not a major share contributor in front-end switching and traditional campus switching.
    Comparison
    Competes with Celestica, Arista, and Cisco in AI back-end, with an advantage concentrated in AI reference designs and end-to-end solutions.
    Risks
    AI cluster buildout cycles, customer self-development or white-box substitution, and supply chain or product evolution risk.
  • META PLATFORMS INC
    Mentioned as a Hyperscaler customer and AI infrastructure investor.
    Strengths
    The report notes Cisco's penetration of Meta's 800G leaf switch layer, reflecting Meta's AI data center network upgrade demand.
    Weaknesses
    The report is not an in-depth single-stock study of META and does not provide META ratings, target price, or financial forecasts.
    Comparison
    Together with other Top 4 US Cloud/Hyperscalers, it is a major source of data center switching demand.
    Risks
    Capex pace, returns on AI infrastructure, and changes in supplier selection.

Key data

  • Total switching market growth36.1% YoY1Q26 total switching market year-over-year growth.
  • Data center switching growth50% YoYData center switching accounts for 66% of the total switching market.
  • AI back-end switching growth121% YoYAI back-end switching accounted for 38% of data center switching demand, versus 26% a year ago.
  • Front-end data center switching growth25.6%-26% YoYGrowth is meaningfully faster than the 11.8% pace in 1Q25.
  • Campus switching growth15.1% YoYThe report views underlying growth at approximately 10%-11%.
  • Top 4 Hyperscalers data center switching growth90.4% YoYIn 1Q26, the top four hyperscalers accounted for 41% of the data center switching market.
  • Cisco campus switching sharearound 53%-53.5%Cisco is the leader in campus switching and may benefit from refresh demand triggered by Catalyst EoS.
  • Cisco Hyperscaler AI back-end share13.2%It increased from near zero in 1Q25 to 1Q26, which the report attributes to penetration in Meta's 800G leaf switch layer.
  • Celestica AI back-end switching share26.3%The report says Celestica remains the largest vendor in AI back-end switching.
  • Nvidia AI back-end switching share24.5%Ranks among the leaders in AI back-end switching.

Impact & implications

From an investment perspective, AI data center buildout continues to support resilient switching demand, especially benefiting vendors with cloud customers, AI clusters, and high-speed networking capabilities. Arista remains strong in data center and Tier-2/NeoCloud segments, Cisco's core campus switching position and breakthrough in Hyperscaler AI back-end switching are worth watching, while Celestica and Nvidia maintain important positions in AI back-end switching. At the same time, stronger front-end switching demand than implied guidance from some companies may create upside revision potential.

Risks

  • AI back-end switching growth is cyclical, and cloud deployment pace can cause quarterly volatility.
  • White-box vendors have high shares in Tier-1 Cloud and front-end switching, which can pressure branded-vendor share and pricing.
  • Enterprise and campus switching demand is seasonal; the report also notes that campus switching quarter-over-quarter declines reflect historical seasonal patterns.
  • If hyperscaler capex falls short of expectations, it could weaken demand for both data center switching and AI back-end switching.
  • Vendor shares can change quickly, and competition among Cisco, Arista, Nvidia, Celestica, HPE, Huawei and others may vary by customer program.

What to watch

  • Whether the top five hyperscalers' 2026 capex growth of 85% year-over-year is realized.
  • Whether AI back-end switching's share of data center switching stays above 38%.
  • Whether Cisco's share continues to rise in hyperscaler back-end switching and in the campus refresh cycle.
  • Whether Arista's actual front-end switching growth continues to exceed its implied guidance.
  • How shares of Celestica, Nvidia, and white-box vendors evolve in AI back-end and Tier-1 Cloud markets.
  • How much campus switching refresh demand is pulled forward by Catalyst 4000 EOS in 2026 and Catalyst 6000 EOS by end-2027.
© 2026 Hilo ResearchAbout UsPrivacy PolicyTerms of Service
Zhejiang ICP No. 2022035445-5
Disclaimer: Market data, charts, indicators, research views, and other information provided on this website are intended solely for information display, research communication, and educational reference. They should not be regarded as personalized investment advice, securities recommendations, trading instructions, solicitations, or guarantees of return. While we strive to improve the reliability of our data and content, such information may still be subject to delays, errors, incompleteness, or untimely updates due to source differences, methodological limitations, system processing, or market volatility. Users should exercise independent judgment based on their own circumstances and bear all risks and responsibilities arising from the use of this website.

Settings

Sign in to view recent logins