5 min read
What the Rise of Generative AI for Networking Means for Advisors
Morningstar researchers forecast strong 34% growth for generative AI networking equipment spending through 2028.
Key Takeaways
A Look at the Generative AI Networking Landscape
Generative AI will drive strong growth for top high-speed networking vendors
![Bar graph showing generative AI networking market from 2022 to estimated 2028.](/content/cs-images/v3/assets/blt9415ea4cc4157833/blt05448f365baee275/66844507bdc1c3ba06ddb542/Apparel_Generative_AI_Networking_Market_Growth.png?format=webp&auto=webp&disable=upscale&width=null)
We project the generative AI networking market to grow to $34 billion in 2028, up from $8 Billion in 2023.
AI is quickly taking over high-speed networking
![Bar graph showing high-speed data center networking for generative AI, non- generative AI, and a mix of generative AI from 2022 to estimated 2028.](/content/cs-images/v3/assets/blt9415ea4cc4157833/blt8a0079e18da3f276/66844507534bb9168a26b510/High-speed_Data_Center_Networking.png?format=webp&auto=webp&disable=upscale&width=null)
We forecast generative AI to make up a majority of high-speed data center networking through 2028.
Generative AI drives growth and higher valuations for Arista, Nvidia, Broadcom, and Marvell
![Morningstar ratings on Arista, Broadcom, Marvell, Nvidia, Cisco, and Enterprise (HPE) for generative AI opportunity.](/content/cs-images/v3/assets/blt9415ea4cc4157833/bltc802fe8d8eb12e85/66844507bdc1c350e6ddb546/Morningstar_Ratings.png?format=webp&auto=webp&disable=upscale&width=null)
We view Arista, Broadcom, Marvell, and Nvidia as best positioned for investing in generative AI networking. Source: Morningstar and Pitchbook. Data as of July 2, 2024.
![Bar graph comparing performance of NVDA Data Center, AMD Data Center, and Intel Data Center from March 2020 to estimated September 2024.](/content/cs-images/v3/assets/blt9415ea4cc4157833/bltc5a4d5fb57a438e5/66b50dbae3c58c30ded5f725/Nvidia_AI_Dominance.png?format=webp&auto=webp&disable=upscale&width=null)
We expect Nvidia’s AI dominance to continue this year and even in 2025.
Marvell is our top pick for generative AI networking chips
![Bar graph comparing Morningstar forecast and Management target model forecast for Marvell AI growth from 2024 to estimated 2029.](/content/cs-images/v3/assets/blt9415ea4cc4157833/bltea91c174d4c855aa/66844507a4dbae151b4d7c39/Marvell_AI_Growth.png?format=webp&auto=webp&disable=upscale&width=null)
We project strong AI growth for Marvell past the end of management's targets, leading to our above-market valuation.