'AI infrastructure is no longer just a hyperscaler story': North American IT distribution revenues hit record high on surging AI infrastructure demand

IT distributors across North America saw a record-breaking third quarter as increased demand for AI infrastructure drove revenues to $28.9 billion, according to new data from IDC.

The research firm’s North America Monthly Distribution Tracker, which is powered by the Global Technology Distribution Council (GTDC), revealed a 29.2% year-over-year surge on the $22.3 billion recorded this time last year.

Enterprise infrastructure, components and semiconductors, and network infrastructure – three product groups closely linked to AI build-outs – collectively accounted for $4.3 billion (66%) of the market’s $6.5 billion increase.

This revenue increase is being driven by AI demand growing beyond the major cloud providers, according to IDC. Indeed, enterprises and specialist cloud providers are investing in their own AI infrastructure, creating opportunities for distributors to deliver the servers, storage, and networking equipment required for deployment.

Many customers are also bringing purchases forward in anticipation of further component price increases, while tight DRAM and NAND supply is pushing up system prices and contributing to higher revenues generated from servers, storage drives, and semiconductors.

Elsewhere, ethernet is also playing a key role in connecting AI fabrics.

“AI infrastructure is no longer just a hyperscaler story,” commented Brendan Rouse, IDC research analyst for partnering ecosystems, channels, and alliances.

“Distributors are moving servers, storage and high-speed networking to ecosystem partners building AI capacity, and their ability to secure allocation and keep deals moving helped the channel set a new high.”

Revenue drivers during Q3

The $28.9 billion revenue generated during Q3 means the total for the year-to-date now stands at $79.4 billion.

Looking beyond the three fastest-growing infrastructure categories, primary growth drivers also saw significant gains. Server revenue increased 154.7% year-over-year, storage drives saw an uptick of 153%, while semiconductors jumped 99%.

Other categories that performed strongly included ethernet switches, which grew by 73.7%, and Infrastructure-as-a-service (IaaS), up 48.4%.

Software was found to be the largest product category in terms of revenue, generating $5.5 billion, followed by personal computing’s total of $5.1 billion. Services rounded out the top three, racking up $3.9 billion during the quarter.

Despite the positives, IDC’s also highlighted ongoing constraints across the distribution market. Consumer electronics revenue, for example, decreased by 5% while imaging dropped by 3.2% and peripherals and accessories saw a decline of 2.3%.

AI infrastructure as a growth driver

Looking ahead, IDC is tipping AI infrastructure to continue as the distribution ecosystem’s main growth engine, driving opportunities in technology resales as well as IT services.

However, memory supply is expected to stay tight into 2027 with prices remaining elevated, while pulled-forward device demand should fade as the year draws to a close.

As hardware demand normalizes, the research firm said distributors may find a steadier income stream in recurring revenue generated through software, cloud, and services.

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