Core routers help drive a 23% surge in Q3 2025 high-end router market

The router industry is on the upswing, signaling that the networking industry is thawing.

A new Dell’Oro report revealed that High-End Router equipment revenue grew 23 percent year over year in the third quarter of 2025, with Core Routers “staging a strong comeback,” rising 68 percent in that period.

“Demand for router equipment is improving across most regions and all customer verticals we track,” said Jimmy Yu, VP at Dell’Oro Group. “In the third quarter, growth rates were especially high in North America due to a broad recovery, following a steep contraction the previous year.”

Strong cloud, service provider showing

During the quarter, service providers and cloud providers were dominant growth drivers.

The total service provider router and switch market, comprising high-end routers and aggregation switches, grew 16 percent year over year to $3.4 billion.

Dell’Oro noted that all three customer verticals—communication service provider, cloud provider, and enterprise/public—grew year-over-year in the quarter and first nine months of 2025. The highest growth on a percentage basis was from cloud providers, and the highest on a dollar basis was from communication service providers.

From a geographic perspective, growth in the high-end router market was across all regions except Latin America, with the highest growth in North America. In the third quarter of 2025, the North American region grew 47 percent year over year.’

Yu said that the drivers of growth in the router market “included capacity additions, data center interconnect, cloud on-ramp, and network modernization for and with AI.”

Cisco’s significant market share gain

Leading the core routing market by revenue share were Cisco, Huawei, HPE, and Juniper.

Within this group, Cisco gained the most market share, gaining five percentage points.

Cisco's networking business, which includes router equipment, grew by 15% year-over-year in its first quarter of fiscal year 2026, driven by strong demand for AI infrastructure and an enterprise upgrade cycle.

Product revenue, including routers, totaled $11.1 billion for the quarter. The vendor secured $1.3 billion in AI infrastructure orders from hyperscaler customers during the quarter.

HPE Juniper reported that networking revenue was $2.8 billion, up 150% in actual dollars and in constant currency, with an operating margin of 23%, compared with 24.4% in the prior-year period.

Juniper reported $1.28 billion in revenue for its most recent quarter, which suggests a role in HPE's $1.68 billion sequential increase in earnings.

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