The GenAI Boom Accelerates and Transforms Ethernet Switching

Ethernet and Router Markets Expand

The server market is expanding rapidly as a result of the GenAI boom, and the Ethernet switch and router markets are beginning to respond with strong growth. Component shortages may limit how quickly suppliers can increase shipments, while demand exceeding supply is also contributing to higher prices.

According to the latest IDC market data, switch revenue increased 43.4 percent year over year to $18.91 billion in Q2 2026. This represented sequential growth of 23.1 percent from Q1 2026.

The router market, which has faced pressure for more than a decade as routing functions have increasingly moved into Ethernet switch ASICs, also grew substantially. Revenue increased 22.8 percent year over year to $4.51 billion, and rose 20.1 percent sequentially.

Service providers, telecommunications companies, neoclouds, and other organizations that do not develop their own routing software for Ethernet switches continue to purchase routers. Hyperscalers and cloud builders increasingly develop such software themselves. Routing equipment from Cisco Systems, Juniper Networks, Huawei Technology, Nokia, Ericsson, and other vendors remains important for many enterprises, particularly for connections between data centers and external networks.

Ethernet Switching Reaches Record Revenue

IDC's Ethernet switch market data shows record sales. The growth is not limited to GenAI systems inside data centers. Campus and edge networks also require upgrades to support connections to those systems.

The public IDC dataset begins in Q3 2013, so it does not cover the effects of the Dot Com boom, the Dot Com bust, or the Great Recession. It does show the impact of the coronavirus pandemic between 2020 and 2022, as well as the current effect of the GenAI boom.

Cisco's overall Ethernet revenue grew 36.2 percent to $5.43 billion in Q2 2026. Nvidia's revenue increased by 2.8X, driven by its GenAI systems business and sales of Spectrum-X switches used to scale out DGX server nodes and NVL72 rack-scale systems.

Nvidia's Ethernet revenue reached $3.86 billion, ahead of Arista Networks, which grew 37.6 percent to $2.53 billion. Hewlett Packard Enterprise's Ethernet switch business grew 6.1 percent to $1.15 billion, even after HPE acquired Juniper Networks. The result represented substantial incremental business for HPE, whose Ethernet operations had historically been concentrated in wireless products under the Aruba brand.

Huawei Technology has competed with HPE in this market for several years. In Q2 2026, Huawei reported $1.55 billion in revenue, an increase of 28.6 percent. IDC no longer reports figures for the collective original design manufacturers (ODMs), but an estimate places their combined revenue at $3.56 billion, up 2.43X year over year. Based on that estimate, the remaining vendors lost market share.

Data Center Switching Drives Growth

IDC separates Ethernet switch sales into data center and campus/edge categories. IDC previously reported both revenue and port counts for those segments, but stopped reporting port counts after Q2 2022. Subsequent port estimates have therefore been used to fill the gap.

Data center Ethernet switch revenue totaled $12.3 billion in Q2 2026, up 64.5 percent year over year and 23 percent sequentially. An estimated 129.5 million ports were sold for data center scale-up, scale-out, and scale-across networks, with scale-out accounting for most of the demand.

Data centers represented 65.1 percent of Ethernet switch revenue and an estimated 42.8 percent of ports shipped.

Port speeds provide another indication of how equipment is being deployed. Speeds above 200 Gb/sec are generally associated with data center use, while 100 Gb/sec and 10 Gb/sec equipment serves both data center and campus/edge networks.

Growth in 800 Gb/sec Switching

Switches with 800 Gb/sec ports were sold exclusively for data center applications during the quarter. Revenue from these products increased 6.1X year over year to $5.07 billion, representing sequential growth of 41.5 percent.

IDC indicated that 800 Gb/sec switches accounted for 35.9 percent of data center ports shipped in Q1 2026. That share increased to 41.2 percent in Q2 2026. The figures correspond to an estimated 35.3 million 800 Gb/sec ports in Q1 and 54.3 million in Q2.

The figures indicate rapid adoption of 800 Gb/sec networking in GenAI clusters. Estimated revenue per port declined somewhat as hyperscalers and cloud builders negotiated discounts, while vendors increased shipment volumes despite component shortages.

Switches with 200 Gb/sec and 400 Gb/sec ports, which are also used primarily in data centers, generated $6.35 billion in revenue, up 71.6 percent year over year. An estimated 35.8 million ports operating at these speeds were sold in Q2.

Estimated prices per port declined slightly for both 800 Gb/sec and 200/400 Gb/sec switches. At the same time, systems using 51.2 Tb/sec and 102.4 Tb/sec ASICs are increasing the number of ports available in each switch. Demand for higher radix, higher bandwidth, or both is supporting continued revenue growth.

Switches with 1.6 Tb/sec ports are expected to begin ramping in volume for high-end GenAI systems. Low-latency Ethernet using UALink or ESUN protocols may also become an alternative to Nvidia's NVLink/NVSwitch combination.

Data Center Vendor Results

Nvidia nearly tripled its data center Ethernet switch sales, according to IDC. HPE's data center Ethernet revenue grew 2.1X, but reached only $345 million, less than one-tenth of Nvidia's data center scale-out Ethernet revenue.

Cisco's data center Ethernet sales increased 77.3 percent to $2.24 billion in Q2 2026. This figure does not include revenue from Cisco's Silicon One ASICs sold to hyperscalers and cloud builders that use ODMs to manufacture their own switches.

Arista Networks remained slightly larger than Cisco in data center Ethernet, with revenue growth of 37.9 percent to $2.3 billion, according to IDC.

If the estimate for collective ODM revenue is accurate, Nvidia outgrew the ODM group in scale-out Ethernet. If the estimate is too high because sales from vendors outside the four leading data center suppliers, Nvidia, Cisco, Arista, and HPE, were stronger than expected, Nvidia's lead over the ODMs would be even greater.

Relationship Between Servers and Networking

The rapidly expanding server market is being driven by GenAI systems, expensive GPU-equipped server nodes, and rack-scale systems with high-speed scale-up networks. Those scale-up networks are not included in IDC's Ethernet data. The growth in servers is only now beginning to lift the Ethernet switch market significantly.

IDC stopped publishing server revenue in its public statements at a certain point, leaving a gap in the available comparison. A related comparison of server core counts and switch ports operating above 10 Gb/sec shows a similar trend.

In Q2 2026, an estimated 6.2 times more server cores were sold than switch ports operating at those speeds. The estimate includes all switch ports, not only data center ports, because not all servers are located in data centers.

The imbalance suggests that some organizations may be underinvesting in networking relative to compute capacity. Insufficient networking can contribute to low server utilization, a recurring issue in infrastructure deployments.