Goldman Sachs raises global AI server demand forecast, increases ASIC share, and notes that hyperscaler capital expenditure is driven by expensive storage and strong demand.

Goldman Sachs raises global AI server demand forecast, increases ASIC share, and notes that hyperscaler capital expenditure is driven by expensive storage and strong demand.

Goldman Sachs raises global server market size forecast, AI server racks become the main growth engine.

According to Chase Trading Desk, on June 24, the Goldman Sachs Allen Chang team released a research report, revising up the total size of the global server market and projecting global server market revenue to reach $1.1 trillion by 2028.

AI server rack revenue will expand at a compound annual growth rate (CAGR) of 118% to $561.4 billion, accounting for 51% of total global server market revenue.

Goldman Sachs also raises its forecast for capital expenditure by major cloud service providers in the US and China. It expects US head companies’ capital expenditures to grow year-on-year by 76%, 35%, and 8% from 2026 to 2028, with a cumulative total reaching $1.145 trillion in 2028.

Goldman Sachs analysts point out that high memory costs and the continued growth of AI workloads are the core factors driving the upward revision of these forecasts.

On the AI chip architecture front, custom ASIC is accelerating its market share, and the proportion of ASIC in total AI chips is expected to rise from 50% in 2026 to 55% in 2028, up from previous estimates.

Goldman Sachs maintains a positive outlook for ongoing investment cycles in AI infrastructure through 2028 and gives a buy rating to several companies across the AI server supply chain.

AI Server Racks: Shipment Forecasts Significantly Raised, Hon Hai Leads ODM Market

Goldman Sachs raises its AI server rack (NVL72 equivalent) shipment forecast for 2026, 2027, and 2028 to 55,000, 105,000, and 163,000 racks, respectively, with the 2027 and 2028 forecasts up 16% and 20% from previous estimates.

By chip platform:

Nvidia NVL72 racks are expected to ship 92,000 and 148,000 units in 2027 and 2028, respectively, up about 19% to 22% over earlier projections;AMD racks shipments remain largely unchanged, projected at 5,000, 13,000, and 15,000 units in 2026, 2027, and 2028, respectively.

As specifications continue to advance, Goldman expects the dollar value of each AI server rack to keep rising, fueling global AI server rack TAM to grow at a CAGR of 118% from 2025 to 2028, reaching $561.4 billion in 2028.

In terms of supplier landscape, Goldman Sachs expects global leading cloud service providers to dominate demand, with the ODM direct supply model continuing as the mainstream on the supply side.

Of these, Hon Hai/Foxconn Industrial Internet (FII) is seen by Goldman as the largest ODM supplier in AI server racks, with global market share predicted to rise from 55% in 2026 to 69% in 2028.

ASIC Penetration Accelerates, Driving Up Overall Server Shipment Volumes

Goldman Sachs raises the shipment forecast for AI servers (8-GPU equivalent) for 2026, 2027, and 2028 by 18%, 24%, and 11%, respectively, to 1.9 million, 2.4 million, and 2.56 million units. The main driver for the revision is the rapid growth in demand for ASIC servers.

Goldman Sachs analysis believes custom ASIC designs provide more efficient solutions for AI computing, including lower latency and memory cost savings by reducing expensive read/write cycles. Global leading cloud service providers keep launching new generations of ASIC chips, supporting AI server growth.

At the level of total AI chip demand, Goldman expects implied AI chip demand from 2026 to 2028 will be 18.85 million, 26.75 million, and 32.21 million units, respectively. Among them:

GPU demand is expected to rise from 9.51 million units in 2026 to 14.57 million in 2028;ASIC demand is set to surge from 9.34 million units to 17.65 million units, with its share increasing from 50% to 55%.

Goldman Sachs projects the global AI server (8-GPU) market size to grow at 26% CAGR from 2025 to 2028, reaching $295.5 billion and accounting for 27% of total server market revenue in 2028.

Goldman also raises revenue growth projections for general servers, revising expected growth rates for 2026-2028 from the previous 15%/6%/6% to 28%/17%/11%. Key drivers include high memory costs and specification upgrades driven by expanding AI workloads.

Goldman Sachs expects the global general server market to grow at a CAGR of 18% to $245.2 billion from 2025 to 2028, accounting for 22% of global server market revenue in 2028.

Cloud Service Provider CapEx: Chinese and US Cloud Providers Accelerate Expansion, Memory Cost is Key Driver

On the client demand side, Goldman's US Internet team expects capital expenditure by major US cloud providers—including Microsoft, Amazon, Meta, Google, and Oracle—to grow year-on-year by 76%, 35%, and 8% from 2026 to 2028.

Three-year forecasts are revised upward by 8%, 27%, and 25%, reaching a cumulative total of $1.145 trillion by 2028.

In the Chinese market, Goldman Sachs expects leading platforms such as ByteDance, Alibaba, Tencent, and Baidu to see capital expenditure grow by 80%, 20%, and 18% year-on-year from 2026 to 2028, with forecast revisions up 37%, 44%, and 55% over prior estimates.

Goldman analysis notes that robust CapEx growth among cloud service providers mainly reflects high memory costs and continued expansion in demand for AI workloads.

In terms of CapEx structure, chips (GPU, ASIC, CPU) remain the largest spending category, followed by memory (HBM), with network and other components (such as cooling, power, chassis, rail kits, etc.) as next priorities.

Compared to global cloud service providers, Chinese providers’ chip spending is influenced by the diversified supply from domestic manufacturers and different AI application scenarios, resulting in more scattered GPU and ASIC configurations.

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The above content is sourced from Chase Trading Desk.

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