Server Market Forecasts Significantly Revised Upward; Dell's Share Surges

Overview

Based on the latest 1Q26 data released by third-party firm 650 Group, this report updates global server industry market size forecasts and the competitive landscape among major vendors. The core conclusion is that the server industry is entering a stronger growth cycle than previously expected, with AI server demand continuing to exceed expectations, driving comprehensive upward revisions to 2026-2030 forecasts. At the vendor level, Dell emerged as the biggest winner this quarter, achieving substantial market share gains in both traditional and AI server segments. In contrast, HPE saw relatively stable growth but lost ground in the enterprise AI market, while SMCI faced share erosion pressure in the neo-cloud AI server market. Accordingly, the report maintains Buy ratings on Dell and HPE and a Sell rating on SMCI.

Core views

Comprehensive Upward Revisions to Industry Forecasts: 650 Group raised its 2030 global server market size forecast from $1.1 trillion to $1.4 trillion (38% CAGR from 2025-2030). Specifically, the 2030 AI server market forecast was raised by approximately 18% to $1.24 trillion, primarily driven by ASP increases (+15%); the 2030 traditional server market forecast was raised by approximately 31% to $164 billion, mainly driven by shipment growth (+19%). This indicates that AI computing investment is still accelerating, hardware value per unit continues to rise, and traditional IT infrastructure refresh demand is stronger than expected. Explosive Growth in Dell's Market Share: Dell delivered an exceptionally strong performance in 1Q26. Traditional server revenue grew 85% YoY, with market share jumping from 20% a year ago to 30%, achieving significant share gains in both neo-cloud and enterprise markets. Even more notable was its AI server business, where revenue surged 622% YoY and market share soared from 5% to 17%. In particular, its share in the enterprise AI server market skyrocketed from 17% to 47%, and its share in the neo-cloud AI server market doubled from 24% to 48%. This reflects that Dell's delivery capabilities and customer recognition in the AI infrastructure supply chain are rapidly translating into financial results. Divergent Competitor Performance: HPE's traditional server revenue grew 20% YoY with market share steady at 11%, but it faced challenges in the AI server segment, with enterprise AI server market share declining sharply from 30% to 17%, indicating it is lagging behind Dell in competing for high-value AI orders. Although SMCI's AI server revenue grew 173% YoY, its share in the neo-cloud market—its core stronghold—dropped from 37% to 33%. However, it achieved share breakthroughs in the enterprise and service provider markets, signaling a shift in its customer mix.

Analysis framework

The report employs a two-tier analytical framework of 'industry aggregate forecasting + vendor share breakdown.' First, citing the latest quarterly tracking data from the authoritative third-party source 650 Group, it conducts volume-price decomposition forecasts for industry revenue, shipments, and average selling prices (ASPs) over the next five years, segmenting growth drivers by vertical (neo-cloud, hyperscale cloud, enterprise). Second, it maps industry aggregate data to specific listed companies, quantitatively assessing changes in competitive advantages by comparing each vendor's revenue growth, shipment changes, and ASP movements across different sub-segments. Finally, combining market share trends with company fundamentals, it validates and maintains existing investment ratings and target prices.

Methodology notes

• Industry Analysis FrameworkVolume-price decomposition

  Decomposing server market revenue growth into shipments (Units) and Average Selling Price (ASP) factors for analysis

  When forecasting AI and traditional server markets, the report specifies adjustment magnitudes for both shipments and ASPs. This approach helps investors determine whether growth stems from genuine increases in device demand (volume) or from higher per-unit value due to configuration upgrades (price), thereby enabling more accurate predictions of upstream component demand and vendor profit elasticity.

• Industry Analysis FrameworkSupply Chain Transmission

  Segmenting server demand by end-customer type (neo-cloud, hyperscale cloud, enterprise)

  Procurement cycles and product preferences vary significantly across downstream customers. Through vertical segmentation, the report reveals the trend of AI server growth spreading from early-stage hyperscalers to neo-clouds and enterprise customers, which is critical for determining which vendors are best positioned to benefit from the next wave of demand.

• Valuation MethodologyPE/PEG valuation

  Determining target prices using P/E multiples based on Next Twelve Months + 1 Year EPS (NTM+1Y EPS)

  Target prices for DELL and HPE are explicitly based on NTM+1Y EPS multiplied by fixed P/E multiples (22x and 18x, respectively). This is the most common relative valuation method for mature hardware companies, implying the analyst's assessment of the alignment between earnings growth and valuation.

Asset mapping & comparison

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

• Dell Technologies (DELL)

  Double-digit share gains in AI and traditional servers; enterprise AI server share leaped from 17% to 47%, showing strongest growth momentum

  Strengths

  Breakthroughs in both enterprise and neo-cloud markets; AI server delivery capability validated by market; solid traditional server base

  Comparison

  Unlike HPE losing ground in enterprise AI and SMCI losing share in neo-clouds, Dell is the only vendor to gain share across all key sub-segments

  Risks

  Weak PC market demand, enterprise IT spending below expectations, intensified competition from white-box vendors, structural slowdown in neo-cloud AI demand

• Hewlett Packard Enterprise (HPE)

  Stable traditional server share but significant loss of enterprise AI server share; lower growth quality vs. Dell

  Strengths

  Solid traditional server base; enterprise market share maintained at 17%

  Weaknesses

  Enterprise AI server share plunged from 30% to 17%; lackluster AI business growth

  Comparison

  AI server growth (+11%) far trails Dell (+622%) and SMCI (+173%); clearly lagging in enterprise AI competition

  Risks

  Customer attrition during Juniper integration, white-box vendors eroding share, rising component costs squeezing margins, storage business transformation falling short

• Super Micro Computer (SMCI)

  AI servers still growing rapidly but core neo-cloud share declining; forced customer mix transition

  Strengths

  AI server revenue maintaining high 173% growth; share breakthroughs in enterprise and service provider markets

  Weaknesses

  Neo-cloud AI server share dropped from 37% to 33%; traditional server shipments down 23% YoY

  Comparison

  While AI growth exceeds HPE, share stability lags Dell; being overtaken by Dell in its traditional neo-cloud stronghold

  Risks

  AI server demand exceeding expectations (upside risk), market share recovery, operating margin improvement, successful customer diversification

Key data

• 2030 Global Server Market Size Forecast$1.4 TrillionRevised up 20% from prior forecast; 2025-2030 CAGR of 38%
• 2030 AI Server Market Size Forecast$1.24 TrillionRevised up approx. 18% from prior forecast; 5-year CAGR of 45%
• 2030 Traditional Server Market Size Forecast$164 BillionRevised up approx. 31% from prior forecast; 5-year CAGR of 13%
• Dell 1Q26 AI Server Revenue Growth+622% YoYMarket share increased from 5% a year ago to 17%
• Dell 1Q26 Traditional Server Market Share30%Up 10 percentage points YoY
• HPE 1Q26 Enterprise AI Server Market Share17%Sharp decline from 30% a year ago

Impact & implications

For the server industry, the significant upward revision in forecasts implies that the AI capex cycle remains in an acceleration phase, with hardware value per unit rising faster than shipment volumes, benefiting leading vendors with high-end product delivery capabilities. For Dell, its share breakthroughs in enterprise and neo-cloud AI server markets validate the competitiveness of its full-stack solutions, which are expected to continue converting into revenue and profit growth over the coming quarters. For HPE, the loss of enterprise AI market share serves as a warning signal; attention should be paid to its Juniper integration progress and whether new products can reverse the trend. For SMCI, although overall growth persists, share erosion in its core stronghold may suppress its valuation premium, making the success of its customer diversification strategy a key variable going forward.

Risks

• Consumer and commercial PC market demand weaker than expected
• Enterprise IT spending and data center capex below expectations
• Hybrid work models leading to reduced enterprise IT investment
• Macroeconomic weakness suppressing consumer demand
• Excess channel inventory triggering price wars, especially in PCs
• Rising raw material and component costs squeezing margins
• Intensified competition from white-box server vendors eroding branded vendor share
• Structural slowdown in neo-cloud AI server demand
• Potential customer attrition during HPE Juniper integration
• Uncertainty arising from corporate actions by strategic investors

What to watch

• Trends in AI server shipments and ASPs across vendors in subsequent quarters
• Whether Dell can sustain high share in the enterprise AI server market
• Progress of HPE Juniper integration and its impact on enterprise market share
• Whether SMCI's share in the neo-cloud market stabilizes and recovers
• Strength of recovery in traditional server enterprise demand
• Changes in white-box vendor penetration in the AI server segment