Up to a certain point, sure, you can vertically scale.

I work for a large CDN, with many thousands of servers pushing near line-rate out of our NICs... we certainly can't vertically scale that.

There is a limit to how much you can vertically scale.

Even for the things we CAN vertically scale, we need to be able to handle hardware failure and OS upgrades without taking any downtime, so you are going to need to be able to horizontally scale enough to handle that.