The weather is good today The weather is good today.
As the utilization rate of non-nvidia GPUs and dedicated AI chips (ASICs) continues to rise, Ethernet connections will become the preferred choice, and 800G switches may be the first to benefit.
$NVIDIA (NVDA.US)$The leadership position in the datacenter allows investors worldwide to explore potential growth points in the entire industry chain. However, the ASIC craze has also expanded the market's vision to more changes in the industry chain.
For a long time, InfiniBand (a communication standard for high-speed data transmission between servers and storage systems) has been the preferred method of interconnectivity for AI data centers.
However, Morgan Stanley pointed out that as ASIC chips gain more market share in the AI computing card market, Ethernet networks (a communication standard different from InfiniBand) will also significantly increase their position in AI data centers.
Namely, the two types of computing cards correspond to two industry chains: Nvidia——InfiniBand; ASIC——Ethernet.
Previously, Hard AI mentioned that with cloud computing companies and OEM manufacturers gradually adopting ASIC chips, the AI supply chain may become more diversified from Nvidia's dominance.
In other words, the usage ratio of ASIC chips in future AI data centers will gradually increase, along with the familiar Nvidia chips, to contribute to the overall growth of the industry.
Morgan Stanley's report indicates that this change will significantly enhance the position of Ethernet switches in AI data centers, predicting that Ethernet's revenue share in AI data centers will increase from 38% in 2023 to 49% in 2026.
The reason why Ethernet is becoming increasingly important in AI data centers is because of:
1) The growth of ASIC in the computing card market;
2) Large-scale data centers hope to diversify their computing power, and Ethernet provides a more open and diverse ecosystem, helping companies reduce supply chain risks;
At the same time, Morgan Stanley also stated that data centers typically upgrade their infrastructure every 4-5 years. Among them, 800G Ethernet switches, as important products, will benefit first.
Starting in 2025, the adoption rate of 800G Ethernet switches will accelerate to cope with the ever-increasing data traffic. By 2026, 800G switches are expected to account for 28% of Ethernet switch revenue in data centers (compared to only 5% currently).
According to Morgan Stanley, benefiting companies include Accton, while Arista, as a representative, has already reflected in the market fluctuations.$Arista Networks (ANET.US)$ and $Cisco (CSCO.US)$and Arista, as a representative, has already reflected in market fluctuations.
Editor/Lambor