A surprising plus is that while Europe’s distribution sector grew faster than expected last year, there is little chance of the same happening in 2026.
The channel is experiencing a perfect storm of shortages, rising prices, and continued economic uncertainty, making it difficult to secure products for customers who decide to invest.
The impact of shortages on PC prices has emerged as a major issue in recent months, but on top of those challenges, demand for artificial intelligence (AI) infrastructure components is impacting the industry.
Market watcher Context looked at figures from distributors across Europe and found that the market grew by 5.2% last year, compared to an expected 3.6%. This was primarily driven by many customers updating their PC estates following the end of support for Windows 10.
However, given the challenges currently facing the industry, European IT distribution is expected to grow by 2.1% this year. Context cites the pressure that AI infrastructure demands are placing on broader hardware availability as one of the reasons.
AI demands for systems that can support intensive workloads are driving demand for top-of-the-line storage and specialized components, skewing demand toward high-end servers. Hyperscalers that dominated hardware orders when building cloud platforms are having the same impact as they look to power their data centers.
The demand for specialized components used in AI infrastructure is taking production capacity away from other parts of the hardware market. This is beginning to reshape pricing, availability, and purchasing behavior across IT channels.
Aaron Smith, Context
“Investments in AI are now large enough to impact the entire technology supply chain,” said Aaron Smith, senior analyst at Context. “Demand for specialized components used in AI infrastructure is taking production capacity away from other parts of the hardware market. This is beginning to reshape pricing, availability, and purchasing behavior across IT channels.”
This year won’t be a bright one for PC retailers. Context predicts that the PC market will decline due to shortages and soaring prices. In any case, it will be difficult to recreate the period when desktop computing revenue increased by about 27% in 2025 due to end of support.
Meanwhile, demand for companies providing servers should continue to grow, with the analyst firm predicting an expected growth of 7.7% in 2026.
These dynamics will create a fragmented market, with high-end infrastructure hardware expected to see the highest demand this year compared to sectors facing supply and price pressures. Context also expects improvements in software and security, which could boost security revenue by 7.7% this year. This growth will be fueled by the AI boom, as customers react to the increased risks posed by technology deployments.
Smith said channels need to monitor the impact of AI infrastructure and be aware of the benefits of operating in the space and the threats it poses to the wider supply chain.
“AI is no longer just about creating new categories of infrastructure,” he added. “It’s starting to influence the dynamics of the entire hardware market, from supply chains and pricing to how organizations prioritize IT investments.”
