The ongoing neocloud and AI infrastructure wobble doesn’t look to be impacting the interconnect space any time soon. Research from TrendForce suggests AI demands on networking will push market revenue to $279.8 billion in 2027, a 95% leap from just $37.9 billion in 2024.

According to the analyst firm, network switch demand will continue to lead the market, with 2027 sales expected to account for nearly 38% of total market revenue. Despite fewer switches being needed at the scale-out level owing to architectural overhauls like Multipath Reliable Connection (MRC), soaring rack densities combined with burgeoning optical options are pushing switch demand on the scale-up side. TrendForce’s report projects sales of products targeting scale-up networking alone will jump from 11% in 2024 to 24% in 2027.

While switch sales are expected to generate $105 billion in 2027, network interface cards and data processing units are also set for sizable growth. TrendForce projects that higher deployment volumes and bandwidth upgrades will result in such products doubling in revenue year over year to $57.4 billion. Nvidia networking chief Gilad Shainer called it the “moment for DPUs” in conversation with SDxCentral, with the hardware responsible for monitoring and controlling increasing agent interactions by adding security while offloading work from CPUs.

Another area ripe for growth is the optical transceivers space. TrendForce forecasts that pluggables revenue will surge 76% year-on-year (YoY) in 2027, outpacing shipment growth, with demand for 1.6 terabit products a leading driver. Bandwidth upgrades on the scale-out side are expected to push the dial higher, with sales of 800G and 1.6T products cited as primary revenue drivers.

“Despite the continued decline in the average selling price (ASP) of 1.6T transceivers as production scales up, these products are still expected to command more than twice the price of their 800G counterparts. Consequently, the growing share of higher-speed products in the shipment mix will continue to bolster overall market revenue,” a TrendForce post reads.

AI infrastructure demands are directly impacting the enterprise networking space, though business demand appears more measured according to Dell’Oro Group. One area set to evolve on the data center side in 2027 is co-packaged optics, or CPO, which the analyst firm says will shift a portion of value traditionally captured by pluggable transceivers into switching equipment.

Nvidia is among the players building out its CPO capacity, with CEO Jensen Huang affirming to SDxCentral that total volume just on the scale-up side would equate to a fifteen-fold increase and that the chip giant is expecting optical switch sales alone to represent “several orders of magnitude more” than it currently ships today.

TrendForce predicts that the distribution of value across the networking will evolve “as AI platform configurations diversify and optical interconnect architectures advance.”