AI infrastructure demand skewing the hardware supply chain

The surprising positive is that the European distribution sector delivered higher than expected growth last year, but there are few chances of that being repeated in 2026.

The channel is entering into a perfect storm of shortages, price rises and ongoing economic uncertainty, making it difficult to secure products for those customers that do make investment decisions.

The impact of shortages on PC pricing has emerged as a major issue in the past few months, but in addition to those challenges, the demand for artificial intelligence (AI) infrastructure components is having an impact on the industry.

Looking at figures from distributors across Europe, market watcher Context found that the market grew by 5.2% last year, when it was expected to come in at 3.6%. That was largely fuelled by the move by many customers to refresh their PC estates due to the end of Windows 10 support.

But given the challenges the industry is currently facing, the forecasts for European IT distribution growth are coming in at 2.1% this year. One of the factors Context blames for that is the pressure that AI infrastructure demands are placing on wider hardware availability.

AI’s appetite for systems that can support intensive workloads is driving demand for top-tier storage and specialised components, skewing demand towards high-end servers. The hyperscalers, which dominated hardware orders as they built out their cloud platforms, are having the same impact as they look to bolster their datacentres.

The demand for specialised components used in AI infrastructure is pulling production capacity away from other parts of the hardware market. That is starting to reshape pricing, availability and purchasing behaviour across the IT channel

“AI investment is now large enough to influence the entire technology supply chain,” said Aaron Smith, senior analyst at Context. “The demand for specialised components used in AI infrastructure is pulling production capacity away from other parts of the hardware market. That is starting to reshape pricing, availability and purchasing behaviour across the IT channel.”

This is not going to be a positive year for those selling PCs, with Context forecasting declines in that market as shortages and price rises take their toll. In any case, it would be difficult to replicate a period when end-of-life-support drove desktop computing revenues up by around 27% in 2025.

On the flip side, those offering servers should see demand continue to rise, where the analyst house is expecting 7.7% growth in 2026.

Those dynamics will create a divided market, with the high-end infrastructure hardware seeing the greatest demand this year, compared to areas facing supply and pricing pressure. Context is also expecting software and security to improve, with revenues on the security front likely to rise by 7.7% this year. That growth will be fuelled by the AI boom, with customers reacting to increased risks caused by rolling out the technology.

Smith said the channel needed to monitor the impact of AI infrastructure and recognise the benefits of being able to operate in that area and the threats it poses for the wider supply chain.

“AI is no longer just creating a new category of infrastructure,” he added. “It is beginning to influence how the entire hardware market behaves, from supply chains and pricing to the way organisations prioritise their IT investments.”