Data Center Market Size, Share, Growth, Trends 2025 to 2034

Data Center Market Size and Growth 2025 to 2034

The global data center market size was valued at USD 217.65 billion in 2024 and is expected to be worth around USD 481.73 billion by 2034, growing at a compound annual growth rate (CAGR) of 11.4% from 2025 to 2034. The U.S. data center market size was estimated at USD 54.42 billion in 2024.

The main focus of the data center market is to plan, build, and run data centers for processing, storing, and handling massive volumes of digital data. The data centers provide safe and effective data operations to various enterprises by housing servers, network infrastructure, and storage devices. Artificial intelligence (AI) and other new technologies are increasing the electricity demand, which puts a strain on the current infrastructure. Companies continue to have a significant influence, therefore industry executives need to think of innovative ways to promote innovation while ensuring that their objectives and regulations are followed. Additionally, they need to make sure that they can continue to be sustainable while meeting the growing demand. The global AI data center market is expected to witness strong growth during the forecast period.

CEO Statements

Lal Karsanbhai, CEO of Emerson Electric Co.

• "AI data center racks consume significantly more power than traditional data centers, with a search on ChatGPT consuming 6 to 10 times the power of a traditional search on Google."

Dev Ittycheria, CEO of MongoDB Inc.

• "The bulk of the growth across all three hyperscalers was really spent on reselling GPU capacity because there’s a lot of demand for training models. We don’t see a lot of, at least today, a lot of AI apps in production. We see a lot of experimentation, but we’re not seeing AI apps in production at scale."

Report Highlights

• The North America has lead the market with highest revenue share of 35.72% in 2024.
• The Europe has generated revenue share of 22.70% in 2024.
• By type, the enterprise segment has accounted revenue share of 39% in 2024.
• By component, the hardware segment has recorded revenue share of 64% in 2024.
• By design, the traditional segment has garnered revenue share of 74% in 2024.
• By tier level, the tier 3 segment has held 54% of the total revenue share in 2024.
• By enterprise size, the large enterprise segment has reported revenue share of 81% in 2024.
• By PUE, the 1.2-1.5 segment has garnered revenue share of 44% in 2024.
• By data center redundancy, the N+1 segment has majored revenue share of around 59% in 2024.

Data Center Market Growth Factors

• Increasing Use of AI and Machine Learning: AI and machine learning technologies are in high demand and data center customers are very keen to invest. Data centers now have to come up with new and innovative solutions to ensure that their facilities can provide enough power and energy for AI. This technology is revolutionizing the data center industry, offering new capabilities such as predictive analytics to automate routine operations and streamline tasks. This can be achieved while improving cyber defenses at a time of ongoing security threats.
• Growing Data Centers: As the amount of data to be processed increases, data centers are becoming exponentially scalable. Such data centers that can scale quickly to meet the increasing demands are called hyperscale data centers. In hyperscale data centers, companies can replace individual components, as opposed to the traditional method of replacing the entire server. This not only reduces costs but also reduces downtime. Moreover, companies can add components in a modular manner to quickly scale operations in hyperscale data centers. This provides users with great flexibility. Therefore, hyperscale data centers will have a dramatic impact on all aspects of data centers in the coming years.
• Proliferation of 5G Technology: 5G can help improve operational efficiency in the data center, in line with the increasing demand for data processing and communication services across the industry. For example, combining 5G and edge data centers can help industries take advantage of the low latency, high speeds, and wide bandwidth that 5G can provide. Innovative 5G can also contribute to cloud and sustainability solutions. According to industry leader Verizon, combining a 5G data center with a traditional cloud computing environment will provide companies with innovative processing capabilities for advanced analytics in the cloud.
• Growing Demand for Liquid Cooling: Liquid cooling refers to the use of liquid to reduce the temperature of computer processing units (CPUs) and graphics processing units (GPUs). With rising costs in the wake of an energy crisis and pressure to go green, the use of liquid cooling in data centers is being hailed for its potential to improve energy efficiency. It also offers the opportunity to use excess heat for other purposes, such as commercial or residential heating.

Data Center Market Trends

• Increasing Shift Towards ESG: As data centers become more mission-critical, organizations need to ensure their environmental, social, and governance (ESG) strategies are implemented across all their business operations. ESG in the data center offers sustainable solutions to mitigate issues such as carbon footprint or excessive water consumption while maintaining maximum efficiency. With the rise of new technologies such as AI putting more pressure on data centers, spending on digital infrastructure is likely to increase to address new challenges posed by the need for more sustainable and renewable energy.
• Use of Hybrid Cloud: Hybrid cloud environments create new digital opportunities while opening the door to cost-effective scalability, flexibility, and modernization. To get the most out of both public and private cloud, more and more organizations are moving towards hybrid cloud deployments. The private cloud offers excellent control and security, while the public cloud offers extensive computing power. With a hybrid cloud architecture, service providers can store and manage critical data and resources on secure private servers and move them to a public server for different processing needs. For instance, Microsoft Azure is being used by companies like Amdocs and Vodafone to overhaul their data centers and improve their cloud-based strategies by integrating their existing applications with Azure services.
• Increasing Focus on Edge Computing: Centralized data processing becomes inefficient and economically unviable as the number of connected devices increases. Edge computing is a data center architecture that leverages the processing power of devices at the network edge to resolve actions and requests. Edge data centers reduce latency and improve the overall performance of all connected Internet of Things (IoT) devices. Users also experience fewer service interruptions. Edge computing is one of the most significant technological developments for data centers. Major players like American Tower and AWS (Amazon Web Services) are approaching the deployment phase and have the resources required to impact edge computing and its evolution.
• Growing Chip-Level Security: The widespread availability of the internet has also led to increased security concerns such as cyberattacks. These growing concerns have led companies to look for innovative solutions to protect data centers. Global tech giants like Google are trying to create chip-level security. A concerted project called OpenTitan aims to develop trustworthy chip designs for data centers. According to Google, chip-level security will ensure that both the hardware and software are in their intended, incorruptible form. The system ensures that essential components boot securely with verifiable, authorized codes. Thus, chip-level security will ensure that the server boots with the correct firmware and is protected from low-level malware.

Report Scope

Data Center Market Dynamics

Drivers

Increased Automation

• Data center automation is the process of automating the routine workflows and processes of a data center. These include scheduling, monitoring, maintenance, and application deployment. Automation also aims to increase agility and operational efficiency and reduce the amount of time IT spends performing routine tasks. This type of automation is immensely valuable to organizations as it frees up human computing time. It also provides insights into servers, automates routine procedures, programs scheduling and monitoring tasks, and enforces processes in line with policies.

Increasing Server Virtualization

• To reduce infrastructure burden, many Managed Service Providers (MSPs) as well as data centers are migrating to Software-Defined Data Centers (SDDCs). In an SDDC model, virtualization technologies recreate the computing power and storage in software form. Server virtualization allows data centers and service providers to accommodate multiple users on a single server by segmenting servers, as opposed to the traditional, inefficient method of assigning a server to each user. Virtualization also facilitates scalability by distributing workloads across multiple servers. This model effectively works like a cloud model where the service provider can distribute data storage and processing power as needed. Virtualization also optimizes efficiency by ensuring resources are used optimally.

Restraints

Concerns Related to Environmental Issues

• Data centers and their associated servers have power requirements for both operation and thermal management. These power requirements result in energy demands. Data center planning should consider long-term environmental impacts. According to Forbes, data centers now account for 1% of electricity demand worldwide and generate 0.3% of carbon emissions.

Strict Sustainability Regulations

• New sustainability regulations are impacting data center operations. Government measures against carbon emissions, power consumption, and other factors for projected environmental benefits are making it difficult to run a successful data center. The plethora of new regulations adds complexity. Managers often have difficulty determining which rules apply to their situation. You must review federal, state, and local policies while adhering to industry best practices.

Opportunities

Rising Data Center Investments

• The explosion in demand for data centers has attracted the attention of investors of all kinds, including growth equity, acquisitions, real estate, and increasingly infrastructure investors. Data centers have attracted investor interest, often due to the steady, utility-like cash flows and risk-adjusted returns. In 2021, there were 209 data center deals with a total value of over US$ 48 billion, up 40% from 2020, when deals were worth US$ 34 billion. In the first half of 2022, there were 87 deals with a total value of US$ 24 billion.

Rising Government Initiatives

• The governments of several regions are actively encouraging the setting up of data centers to process and store enormous volumes of data. For instance, the development of broadband connections is recognized to have been facilitated by China's "Broadband China Strategy". By 2025, the government also intends to have eight computer nodes and ten data center clusters in an integrated data center system.

Challenges

Increasing Power and Cooling Concerns

• The two main issues faced by the data center market are associated with power and cooling. According to the International Energy Agency (IEA), data centers account for nearly 1% and 1.5% of the world's electricity consumption. Data centers must give priority to increasing cooling efficiency and optimizing power consumption to meet this challenge. In comparison to more conventional air-based cooling methods, a variety of contemporary cooling systems, such as liquid cooling solutions, can be used to drastically lowering energy consumption by the data centers. Furthermore, significant energy savings can also be achieved by using servers with low-power processors that are energy-efficient hardware.

Growing Cybersecurity Issues

• Cybersecurity has become an even more critical concern in recent years. The increase in cyber threats and the potential for data breaches have prompted data center operators to strengthen their security measures. In response, data centers must implement robust cybersecurity measures. In addition, the use of artificial intelligence (AI) and machine learning algorithms can strengthen the ability of data centers to effectively detect and respond to emerging threats.

Data Center Market Segmental Analysis

The data center market is segmented into components, type, capacity, design, tier level, data center redundancy, PUE, end use and region. Based on components, the market is classified into hardware, software and services. Based on type, the market is classified into edge, colocation, enterprise, hyperscale, and HPC. Based on capacity, the market is classified into below 100 MW, 101–800 MW, and above 801 MW. Based on design, the market is classified into traditional, modular and containerized. Based on tier type, the market is classified into  tier 1, tier 2, tier 3 and tier 4. Based on end use, the market is classified into BFSI, government, IT & telecom, healthcare and others. Based on data center redundancy, the market is classified into N+1, 2N, N+2 and N. Based on PUE, the market is classified into less than 1.2, 1.2 - 1.5, 1.5 - 2.0 and Greater than 2.0.

Components Analysis

Hardware: The hardware segment has dominated the market in 2024. The physical infrastructure of data centers is made up of hardware, which includes servers, storage devices, networking hardware, and other tangible assets. Hardware market growth is being driven by the increasing need for networking hardware, storage solutions, and high-performance computing.

Software: The data centers help in processing, managing, and securing data. For this purpose, the data centers use a variety of operating systems, apps, management tools, and virtualization software. The primary reason for the rising demand for the development of automation and software-defined infrastructure technologies is the enhancement of operational performance and resource optimization.

Data Center Market Revenue Share, By Components, 2024 (%)

Services: Specialized services are necessary for businesses to thrive in this dynamic environment and optimize investments. The vendors support data center management and performance optimization by offering installation, maintenance, and consulting services. The fundamental architecture of data centers is made up of solutions, but services provide expertise, support, and customization to adapt to changing requirements and ensure smooth operations.

Type Analysis

Enterprise: This segment has captured highest revenue share in 2024. Corporate data centers are privately owned assets that corporations own and administer to manage their inbuilt IT infrastructure and run business activities. They give specialized control over data and programs, assuring security and adherence to specific corporate needs.

Edge: Edge data centers focus on decentralizing data processing and storage, positioning infrastructure closer to end users or data sources. They minimize latency in real-time applications including IoT gadgets, media streaming, and edge analytics. These centers are frequently located in scattered or remote areas and serve developing technologies that require real-time data processing.

Colocation: Colocation centers provide infrastructure and facilities to several tenants. They provide organizations low-cost choices for keeping servers and technology assets while benefiting from common facilities, security, and connectivity.

Hyperscale: Hyperscale data centers are massive facilities designed to accommodate the massive size of cloud services and global internet platforms. They offer significant computation and storage capacity to handle enormous volumes of data and meet the scalability needs of a cloud-based applications as well as services.

HPC: High-performance computing (HPC) data centers are designed to be the most energy-efficient data centers in the world. The data center uses world-class technologies and serves as a showcase facility to demonstrate data center energy efficiency. An HPC data center can process large amounts of computations faster than any single commercially available computer using multiple servers and "supercomputers." Specifically, HPC refers to the use of aggregated computing resources and simultaneous processing techniques to run advanced programs and solve complex computational problems, increasing performance better than a single computer or server.

Capacity Analysis

Below 100 MW: The sub-100 MW sector is often used for smaller data centers or establishments with low computing requirements. It is designed for smaller businesses, minor activities, or applications that require a modest amount of electricity.

101-800 MW: Mid-sized data centers serve a broader range of businesses and operations with medium to high computing and storage requirements. These data centers handle large workloads but are not at hyperscale levels.

Above 801 MW: Over 800 MW data centers operate with massive power capacities and meet the needs of large cloud service providers, technology giants, and enterprises with high computing needs. These facilities handle workloads, manage global data storage, and provide infrastructure for large-scale cloud services.

Design Analysis

Traditional: This segment has dominated the market in 2024. Traditional data centres follow a certain architectural design that includes network infrastructure, computer resources, and storage devices. They usually include custom-built infrastructure and rigid configurations with limited flexibility for rapid scalability.

Modular: Modular data centers use prefabricated modules or containers that can be quickly deployed and scaled. They offer flexibility in design and allow for rapid expansion or contraction based on changing requirements. The modular approach speeds up deployment times and provides efficient use of space.

Containerized: Containerized data centers host information technology tools inside shipping container-like buildings. They provide mobility and ease of deployment in a variety of situations, making them suited for temporary or distant deployments. This architecture encourages agility and enables the quick deployment of computer equipment. 

Tier Analysis

Tier 1: Tier 1 facilities provide basic infrastructure with minimal redundancy. They provide a single path for power and cooling. These data centres are appropriate for small enterprises or non-essential applications where maintenance disruption may be accepted without causing major disruption to operations. They lack overlapping elements and networks, making them more vulnerable to disruption while maintaining or equipment failure.

Tier 2: Tier 2 data centres feature several redundant components and provide greater dependability than Tier 1. Sometimes there may be outages for maintenance or enhancements to equipment, regardless of having multiple cooling processes and power supply systems. These facilities are geared at small and medium-sized organisations with slightly greater uptime needs.

Tier 3: Tier 3 facilities offer a higher level of redundancy and availability. They are equipped with numerous electrical and coolant distribution lines, as well as concurrent maintenance capabilities. Tier 3 data centers have merit for companies that need constant dependability for critical programs and enables scheduled repairs without interfering with company operations.

Tier 4: The strongest and most reliable data centers are Tier 4 facilities. They provide 100% redundant systems and parts, so there isn't a possibility of failure. These facilities offer the highest degree of fault acceptance, allow for concurrent maintenance, and ensures that services continue even in the case of ongoing repairs or equipment failure. Big businesses and financial organizations, who rely on critical infrastructure that require substantial downtime, are common users of Tier 4 data centers.

By End Use

BFSI: Security, compliance, and high availability are key components of the data center needs for the banking, financial services, and insurance (BFSI) industry.  The sector requires a strong infrastructure to facilitate regular transactions, secure financial information, and comply with rules.

Government: With individuals' increasing expectations of internet-based services and the government's introduction of several e-government projects, the need for data centers is increasing tremendously. A strategy framework for high availability, rapid scalability, skilled leadership, and optimal resource use must be created. The government prioritizes the development of a robust data center infrastructure that allows data preservation, cloud computing protection, including constant internet access. Government subsidies and an first policy framework have been designed to encourage assets.

IT & Telecom: Modern data centers have become a crucial part of IT infrastructure. Storage and data centers are being designed to meet the needs of the clientele. It is important to restructure the traditional data center infrastructure as any kind of disruption in a data center can result in a huge loss to the structure of an organization. Telecom companies and IT service providers are looking for agile and scalable data center architectures to adapt to the evolving technology landscape and enable faster data processing, lower latency, and improved network performance.

Healthcare: Data centers store a tremendous amount of patient information that is crucial for medical management. Since the digitization of healthcare, electronic health records are stored that contain all the medical histories, test results, and medication histories. To maintain all the benefits of digital healthcare infrastructure, the healthcare industry needs data centers and data experts. They can ensure flawless managed services along with data privacy and security compliance. A resilient and trustworthy data center facility is important for handling all of the information gathered in the medical field, both now and in the future.

Others: Others include energy, retail & e-commerce, and entertainment. Data centers help energy companies manage complex operations such as grid management, energy trading, and resource optimization. Data centers specialize in offering analysis tools that optimize energy and enable renewable energy innovation. Data centres are used in retail and e-commerce to manage transactions carried out online, inventory, customer relationships, and personalised marketing. These centers support high-volume, real-time transactions and provide a seamless online shopping experience. Entertainment media has evolved dramatically over the past few decades. Data centers are the backbone of a seamless, high-performance streaming experience. By providing space, computing power, and connections, data centers store and distribute content while ensuring its performance, reliability, and security. Data centers also provide content delivery networks (CDN), Internet service providers (ISP), content providers, and other centralized locations to enhance the streaming experience and strengthen their businesses. To properly supply these services, data centers must provide stable environments that are constantly available to meet the changing needs of ever-increasing amounts of high-density, constrained by latency content.

Data Center Market Regional Analysis

The data center market is segmented into various regions, including North America, Europe, Asia-Pacific, and LAMEA. The North America region has dominated the market in 2024.

Why is North America hit largest share in the data center market?

The North America data center market size was valued at USD 77.74 billion in 2024 and is expected to be worth around USD 172.07 billion by 2034. In North America, the data center market is witnessing a surge in the construction of hyperscale data centers, driven by the demand for cloud services and digital transformation. The region prioritizes sustainability and is gradually using green data center methods. Hybrid cloud solutions and edge computing are increasing in popularity, demonstrating the need for adaptable and effective data processing facilities to support various industries in the changing digital landscape.

What are the driving factors of Europe data center market?

The Europe data center market size was valued at USD 49.41 billion in 2024 and is expected to be worth around USD 109.35 billion by 2034. In Europe, the data center market reflects a commitment to sustainability and technological innovation. The region is witnessing a growing demand for energy-efficient and green data centers. Hybrid cloud solutions are gaining traction, emphasizing the flexibility of data processing strategies. Europe's data center ecosystem exemplifies a harmonic combination of advances in AI integration, sustainable energy practices, and durable infrastructure, putting the region at the top of the list of data center developments.

Why is Asia-Pacific region exhibits a robust growth in the data center market?

The Asia-Pacific data center market size was valued at USD 67.82 billion in 2024 and is expected to be worth around USD 150.11 billion by 2034. Asia Pacific exhibits a robust growth characterized by significant investments in data center infrastructure. To meet scalable demands, the area is experiencing an expansion of flexible and modular data centers. Asia Pacific, with a dynamic combination of developed and emerging markets, is well-positioned to embrace cutting-edge technologies like AI and edge computing to meet increasing expectations for digital services along with information storage.

LAMEA region exhibit remarkable growth in the data center market

The LAMEA data center market size was valued at USD 22.68 billion in 2024 and is expected to be worth around USD 50.20 billion by 2034. The LAMEA region is expected to exhibit remarkable growth during the forecast period. The region is witnessing a tremendous digital revolution, which is accelerating economic growth. Data center investments help with this since they provide crucial infrastructure for AI, cloud computing, and IoT technologies. For example, Microsoft's new data centers in the UAE and South Africa are expected to create significant economic opportunities, including local innovation and job creation. Added to that, the South American market is continually expanding due to increased demand for initiatives related to digital transformation, cloud services, and the development of e-commerce and technical services.

Data Center Market Top Companies

• Digital Realty
• Dataspan
• Equinix, Inc.
• Google Cloud
• IBM
• Schneider Electric SE
• Microsoft
• NTT Communications Corporation
• Oracle
• ABB Ltd
• Cisco Systems Inc.
• Tencent Cloud
• Amazon Web Services, Inc.
• Eaton Corporation
• AT&T Intellectual Property
• CyrusOne
• Alibaba Cloud
• Lumen Technologies (CenturyLink)
• IBM Corporation
• China Telecom Americas, Inc.
• CoreSite
• Siemens AG

Most companies are actively conducting research and development. Companies are pursuing strategies to seize new market opportunities and target new customers by developing sustainable products. Intense competition among leading players to launch advanced and innovative products encourages companies to invest in the research and development of energy-efficient data centers. Also, numerous end customers are shifting to data center solutions, making it much simpler for data centers to implement green practices while maintaining performance. Akamai Technologies Inc. has announced the official launch of three new cloud data centers in Paris (France), Washington DC, and Chicago (USA) in July 2023, with additional facilities in Seattle (USA) and Chennai (India). Moreover, Akamai's cloud architecture now includes improved instance types. Ardian, an investment business, said in October 2023 that it has reached a partnership with Verne, a green data center infrastructure based in the UK. Ardian's latest agreements benefited Verne's strong development plan in Northern Europe, which was further strengthened by a $1 billion capital expenditure. This massive project might be funded by a newly developed free-floating environmentally friendly financing package sponsored by major European and international banks.

Recent Developments

Key players in the data center market are pivotal in delivering a variety of innovative construction solutions, such as prefabrication techniques, sustainable materials, and advanced digital technologies.

• In May 2024, Cisco Systems opened its first edge data centers to expand its security presence in Indonesia. This facility helps customers in the financial services and public sector comply with local data regulations and compliance requirements.
• Schneider Electric and Digital Realty, a distributor of colocation and connectivity solutions, announced an alliance in April 2024. The company's arrangement aims at maximizing the life of the PAR5 data center's mission-critical systems.
• In March 2024, Eaton has unveiled a revolutionary customizable data center solution for businesses looking to fulfill the demands of AI, machine learning, and edge computing innovations.
• In January 2024, NTT opened a new data center in India. The facility is vendor-neutral and interconnected with other NTT data center locations to reduce latency and provide convenient connections to major public cloud providers.
• In January 2024, Evoque Data Center Solutions, a company providing colocation, connectivity and infrastructure services, publicly announced that it had successfully acquired Cyxtera's data center portfolio. 

Microsoft released their newest stable cloud space in Poland in April 2023, making it the first in Central and Eastern Europe. Polish Azure has three physical sites in Warsaw, each containing one or more data centres that assure the most advanced standards of data security, privacy, and regulatory compliance. These advancements mark a notable expansion in the data center market, driven by strategic acquisitions and innovative projects. The focus is on boosting sustainability, enhancing construction efficiency, and broadening product offerings to meet diverse building needs.

Market Segmentation

By Components

• Hardware
• Software
• Services

By Type

• Edge
• Colocation
• Enterprise
• Hyperscale
• HPC

By Capacity

• Below 100 MW
• 101–800 MW
• Above 801 MW

By Design

• Traditional
• Modular
• Containerized

By Tier

• Tier 1
• Tier 2
• Tier 3
• Tier 4

By Data Center Redundancy

• N+1
• 2N
• N+2
• N

By PUE

• Less than 1.2
• 1.2 - 1.5
• 1.5 - 2.0
• Greater than 2.0

By End Use 

• BFSI
• Government
• IT & Telecom
• Healthcare
• Others

By Region

• North America
• Europe
• APAC
• LAMEA