Dell'Oro Group Finds Telecom Equipment Revenues Rose 5% in 1H26

Telecom equipment revenues grew 5% year over year in the first half of 2026, extending the recovery seen in 2025, with cloud providers contributing 55% of the growth tied to AI and data center buildouts.

Market Overview

The analyst report says aggregate worldwide telecom equipment revenues across six tracked programs increased 5% year over year in 1H26, after a 4% increase in 2025.

The report links the 2025 recovery to inventory normalization, easier comparisons, improving wireless and wireline demand, and increased cloud investment, while noting that 1H26 growth tilted toward data center exposure.

Key Findings

Cloud providers accounted for an estimated 55% of telecom equipment revenue growth in 1H26, reflecting continued investment in AI and data center infrastructure and the connectivity needed to support it.

The report says traditional communication service providers remain the majority of revenues, accounting for more than 90%.

Technology or Trend Analysis

The report states 1H26 growth was concentrated in Optical Transport and High End Routers, the segments most directly exposed to cloud and data center infrastructure investments.

It says Optical Transport revenue increased at a double-digit pace, supported by demand for data center interconnect, while RAN and MCN revenues stayed relatively stable, along with Broadband Access and Microwave Transmission.

Regional Dynamics

The report says North America, EMEA, CALA, and Asia Pacific excluding China contributed to 1H26 expansion.

It also says China remained more challenging, with the report citing a shift in spending from traditional telecom networks toward compute infrastructure, including top Chinese CSPs targeting 40% growth in computing capex in 2026 and traditional connectivity capex expected to decline 24%.

Supplier Performance

Huawei was identified as the largest telecom equipment supplier worldwide, followed by Nokia and Ericsson.

Outside China, the report says Huawei and Cisco gained share in 1H26 versus 2025, while Ericsson and Nokia’s combined revenue share declined by about three percentage points.

Forecast or Analyst Outlook

The report projects worldwide revenues across the six programs will increase 3% to 5% in 2026, compared with a previous update of 2% to 4%.

It says China is tracking below full-year expectations and that rising memory and component costs are among the second-half concerns, with these headwinds balanced by continued cloud and AI-related infrastructure investment.

This Analyst Signals brief reflects a neutral, fact-based summary of the original research note.

Blog post, originally published at delloro.com.