By Jonathan Cassell, Lead Analyst at Supplyframe Commodity IQ
AI continues to be the killer app in the tech industry, with data center AI servers and related equipment driving virtually all demand growth for the electronic components market in 2025. However, hints are emerging that the AI boom may be slowing, a trend that is projected to become more pronounced during 2026.
The demand deceleration may bring some relief to buyers who have long been contending with critically short supplies and inflated prices for graphics processing units (GPUs), high-bandwidth memory (HBM) and other components used for AI applications.
Global revenue for GPUs and other AI accelerators used for data center AI infrastructure is set to rise by about 67% in 2025, according to one market watcher. While impressive, this increase actually represents a major deceleration from the 250% annual increases seen during 2023 and 2024. Next year will see another dramatic slowdown in growth, with revenue expected to rise by just 12%. The following years will be flat, with marginal single-digit percentage annual growth expected through 2030.
Some evidence of a mounting slowdown in AI chip demand may have appeared in the financial results for leading AI GPU supplier Nvidia. Nvidia’s data revenue for its fiscal second quarter ending in late July came in slightly below Wall Street expectations. Although the company issued a positive forecast for fiscal Q3, with sequential growth of about 16% expected, Nvidia’s stock experienced a brief selloff.
The potential demand slowdown may give a glimmer of hope that supplies of key AI-related components will loosen up, resulting in improved availability and pricing. Nvidia has been increasing production of its Blackwell line of GPUs. Moreover, competition is rising in the market, with the increasing availability of custom ASIC chips like Google’s TPUs, as well as merchant market devices like AMD’s Instinct GPU line.
Despite some mixed signals, supply conditions may improve somewhat for HBM in 2026. Leading memory maker Samsung is set to expand its presence in the HBM market, an area where it has been lagging, boosting overall supplies. On the other hand, third-ranked memory supplier Micron has reportedly indicated to customers that its supply of HBM has sold out for 2026.
The increase in Samsung’s production and increased manufacturing from other suppliers could mitigate the severity of the HBM shortage, although demand is still expected to rise in 2026.
HBM lead times and pricing are expected to rise through Q4 2025, as presented by the Commodity IQ Market Dynamics Forecast. However, conditions are set to stabilize by Q1 2026, indicating that the period of dramatic increases in HBM costs and delivery lags could be coming to an end, potentially presaging improved availability.