The global data center market size is expected to expand around USD 481.73 billion by 2034 and is poised to grow at a 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 increasing demand for cloud computing services, coupled with the growing adoption of IoT devices and data-intensive applications, is driving substantial growth in the data center market. Innovations in technology, such as the integration of artificial intelligence (AI), edge computing, and heightened investments in IT infrastructure and regional digital transformation initiatives, are further fueling this expansion.
Report Highlights
- North America accounted for revenue share of 35.72% in 2024.
- The Europe has held revenue share of 22.70% in 2024.
- By type, the enterprise segment has held revenue share of 39% in 2024.
- By component, the hardware segment has held 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 garnered 54% of the total revenue share in 2024.
- By enterprise size, the large enterprise segment has recorded revenue share of 81% in 2024.
- By PUE, the 1.2-1.5 segment has recorded revenue share of 44% in 2024.
- By data center redundancy, the N+1 segment has reported revenue share of around 59% in 2024.
Growing Adoption of Cloud Computing
As businesses increasingly migrate to cloud platforms for scalability, cost-effectiveness, and improved accessibility, the data center market is experiencing significant growth. Cloud service providers depend on robust data centers to support their expanding infrastructure needs. The rising demand for hybrid cloud models, which combine both private and public cloud environments, is further accelerating investments in modern data centers. The trend toward digital transformation, powered by the adoption of SaaS platforms and data-intensive applications, has made cloud computing a central component for businesses. Data centers are essential for providing the storage, processing, and networking capabilities necessary for seamless cloud operations. In February 2024, Akamai launched the Akamai Connected Cloud, a new initiative offering innovative cloud services to enhance distributed network solutions, improving scalability, performance, and security for global enterprises.
Increasing Demand for Storage of Digital Archives
The increasing need for secure, scalable, and easily accessible storage for born-digital and digitized archives is another key driver in the data center market. As digital content and archived materials grow, industries must adopt cloud-based solutions that offer flexibility and cost-effectiveness for managing vast amounts of data. The rise of remote work and the digitalization of operations further amplify this demand.
In the UK, for example, cloud adoption has dramatically increased within the public sector. According to the Cloud Industry Forum, organizations using cloud services rose from 38% in 2010 to 78% in 2023. This transformation highlights a growing reliance on cloud storage for managing born-digital and digitized archives across industries globally.
The Shift Toward Multi-Cloud and Hybrid Solutions
The adoption of multi-cloud and hybrid cloud solutions is reshaping the data center market, with many organizations turning to multiple cloud providers for data storage needs. This strategy diversifies cloud infrastructure, reduces risks associated with vendor dependence, and enhances performance by leveraging the strengths of various platforms.
This trend reflects a broader strategy to increase flexibility, scalability, and resilience, improving overall operational efficiency. Major public cloud providers, such as AWS, Azure, Google Cloud, and IBM Cloud, aim to combine their strengths while minimizing risks linked to vendor lock-in.
Hybrid cloud solutions are also gaining traction, combining on-premises infrastructure with cloud services for enhanced flexibility, scalability, and control over data. For example, the U.S. Department of Defense (DoD) employs a hybrid cloud strategy to modernize its IT systems while integrating commercial cloud services like Microsoft Azure and AWS to access advanced technologies like AI and machine learning. The adoption of multi-cloud and hybrid solutions represents a significant shift in global data center strategies, focusing on flexibility, risk mitigation, and performance optimization.
Market Opportunities in Retail and E-Commerce
The retail and e-commerce sector stands out as one of the most significant drivers of growth in the data center market. This industry relies heavily on a wide range of data center services, including colocation, cloud infrastructure, data protection, and professional services. These services are crucial for supporting online shopping platforms, payment systems, inventory management, customer service, and data analytics. As the sector continues to embrace digital transformation and cloud migration, data centers play a pivotal role in enhancing customer experiences, operational efficiency, and competitive advantage.
The COVID-19 pandemic further accelerated the growth of e-commerce, prompting a surge in demand for data center services. The integration of advanced technologies such as AI, machine learning, and blockchain is further fueling this growth. For instance, Walmart’s 74% increase in e-commerce orders in Q1 of fiscal year 2021 demonstrates the vital role of data centers in meeting the rising demand for online retail services.
Big data analytics is also a key driver in e-commerce growth, enabling companies to solve complex problems and innovate by analyzing customer and transaction data. Industry leaders like Amazon are continuously leveraging this data to introduce new services and set new benchmarks in the market.
By Component Insights: IT Infrastructure Growth
The IT infrastructure segment is expected to experience significant growth throughout the forecast period. A data center’s IT infrastructure includes all the necessary hardware, software, and solutions required to establish or expand data centers. This segment encompasses server infrastructure, storage solutions, software-defined data centers (SDDC), network infrastructure, converged infrastructure, backup and recovery software, automation software, and data center infrastructure management (DCIM) solutions. The growing demand for computing power and storage capacity, driven by expanding data traffic, is fueling the utilization of this IT infrastructure. Additionally, the increasing adoption of cloud technologies is prompting a shift from on-premises data infrastructure to cloud-based solutions, further accelerating demand for servers and other IT equipment.
Regional Insights: North America
North America is expected to contribute 35% to the global data center market growth during the forecast period. The region’s strong growth is driven by the widespread adoption of cloud computing by businesses in the U.S. and Canada. Enterprises are moving to cloud-based solutions to reduce capital and operational expenses associated with maintaining on-premises infrastructure. Leading hyper-scale providers like Amazon Web Services, Microsoft, and Oracle are popular choices for businesses looking to meet their computing needs at minimal cost. Furthermore, North America is home to a large number of established data centers, with companies such as Apple operating multiple centers across the region. The increasing demand for high-performance computing across industries like government, finance, and healthcare further contributes to this market growth.
Key trends in the North American market include the integration of AI, machine learning, IoT, edge computing, green data centers, and decentralized data centers. Cost savings, real-time data processing, and data sovereignty regulations are also major driving forces behind this expansion. As the digital economy, internet penetration, and enterprise demand continue to grow, the data center market is expected to experience sustained growth with a focus on energy efficiency, virtualization, and network security.
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