Data Center Market to Grow at a CAGR of 11.51% from 2025 to 2032 | SkyQuest Technology Consulting

WESTFORD, Mass., July 28, 2025 /PRNewswire/ -- SkyQuest Technology Consulting published a report, titled, Data Center Market- Global Opportunity Analysis and Industry Forecast, 2025-2032", valued at USD 505.8 Billion in 2024. With a projected CAGR of 11.51% from 2025 to 2032, the market is expected to reach USD 1,189.5 Billion by the end of 2032. Significant rise in the data generation across several industries and adoption of digital transformation, including cloud-based computing, AI, ML, and IoT, driving the market growth.

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Data Center Market Dynamics:

The proliferation of edge computing is significantly contributing to the growth of the data center sector. As the volume of data generated by IoT devices and real-time applications increases, low-latency processing is becoming increasingly important. Application performance is improved, and latency is reduced by edge data centers located closer to the data generation source. This trend is particularly apparent in sectors like autonomous vehicles, healthcare, and smart cities where real-time data processing is crucial. Sustainability initiatives are also playing a major role in driving the growth of the data center market. Data center operators are focusing more on energy-efficient solutions, renewable energy integration, and advanced cooling technologies to reduce carbon footprints.

In addition, ongoing advancements in data center technologies, like liquid cooling systems, AI-powered management platforms, and modular data center designs, are lowering costs and increasing operational effectiveness. Businesses are being encouraged by these developments to modernize their data infrastructure, which is driving further market expansion.

• In June 2025, Amazon has announced a USD 10 billion investment to construct a new data center and artificial intelligence campus in Richmond County, North Carolina. This major project is expected to generate at least 500 high-skilled jobs, with construction and supply chains supporting thousands more. One of the largest investments in North Carolina's history aims to revitalize an area that was formerly reliant on textile production.

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Recent Developments in Data Center Market

• To address the growing demand for cloud computing services, particularly for generative AI applications, Alibaba Cloud- the digital technology arm of Alibaba Group-had opened a second data center in Thailand in February 2025. The new facility renders support to the Thai government's vision to develop sustainable technology and digital innovation and at the same time build local capacity. Its services, which meet industry-specific demands, include elastic computing, storage, databases, networking, security, data analytics, and artificial intelligence (AI).
• To meet ever-growing demand for sustainability and artificial intelligence (AI), Amazon Web Services (AWS) launched its updated data center infrastructure in December 2024. It is estimated the updates will improve liquid cooling, power distribution, and rack design, all of which will lead to an increase in rack density of up to sixfold in the coming two years. Per AWS, the goal of these improvements is to improve service availability while improving energy efficiency, and to offer a 12% uplift in compute power per site.
• Equinix opened its first two data centers in Malaysia in May 2024. The International Business Exchange (IBX) centers are up and running in Johor and Kuala Lumpur. The facilities aim to improve regional connectivity and serve Equinix's clients in Malaysia.

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Major Challenges in Data Center Industry

The rising amount of energy consumption and cool facilities is one of the key factors hindering the growth of the market. At the beginning of 2024, data centers use about 3% of power worldwide. By the end of 2025, this figure is expected to soar to about 7%. Due to criticisms from regulators and environmental groups, operators spend a fortune on green technologies, while costing them more and getting in the way of expansion planning.

In addition, as operations become ever more complex, cloud management, cybersecurity, and hardware maintenance will be areas to master. The lack of skilled labor remains an issue globally, though. Reports state that in 2024, more than 60% of data center operators will struggle to find workers, mostly edge and hyperscale facilities. This shortage of labor hinders successful operations expansion through 2025 and beyond, changes the amount of time that it takes to bring on new workers, and drives up costs.

Competitive Landscape:

In the fiercely competitive data center industry, Equinix, Digital Realty, Amazon Web Services (AWS), Microsoft, and Google are all significant rivals. All of them are putting a lot of effort into improving their infrastructure and making it more ecologically friendly. While Equinix concentrates on expanding liquid cooling globally, Digital Realty leverages AI to effectively manage its operations. To manage AI workloads, AWS and Microsoft invested in hyperscale and modular centers. CoreWeave specifically addresses cloud needs driven by AI, with a focus on GPU-focused scalability.

Major players in the data center industry include,

• Alibaba Cloud
• Amazon Web Services, Inc.
•  AT&T Intellectual Property
• Lumen Technologies (CenturyLink)
• China Telecom Americas, Inc.
• CoreSite
• CyrusOne
• Digital Realty
• Equinix, Inc.
• Google Cloud
• IBM Corporation

Data Center Market Segmentation:

The data center market is segmented into offering, type, size, data center redundancy, end user, and region. By offering, the market is divided into hardware, software, and services. Depending on the type, it is classified into enterprise (on-premises) data centers, public cloud data centers & hyperscale data centers, and managed data centers & colocation center. According to size, the market is categorized into micro data center <10 mw, small data center 10 mw–30 mw, medium data centre 30–50 mw, large data centre 50–80 mw, and hyperscale/very large data centre >80 mw. As per data center redundancy, it is segregated into n, n+1, n+2, and 2n. On the basis of end user, the market is classified into cloud service providers, technology providers, telecom, healthcare, banking & financial services, retail & e-commerce, entertainment & media, and energy.

• By offering, owing to the increasing need for networking hardware, storage systems, and high-performance servers to support workloads related to cloud computing and artificial intelligence, hardware dominated the market in 2024.
• By type, hyperscale data centers rose to the top of the type of segment in 2024 due to the rapid expansion of global tech giants like Amazon, Google, and Microsoft.
• By size, the hyperscale/very large data center (>80 mw) facilities held the largest share by size in 2024 because of their enormous demands for data processing across cloud platforms and AI integration.
• By data center redundancy, the N+1 configuration gained the most traction in 2024. This is because it struck a balance between cost-effectiveness and improved system reliability,
• By end user, the cloud service providers category became the most popular end users in 2024 as a result of the increasing demand for remote, scalable, and hybrid IT infrastructure.

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Regional Insights

The North American data center market reached a significant market share of over 40.0% in 2024 due to the expanding use of cloud computing, artificial intelligence (AI), and big data analytics. Businesses in the region are rapidly embracing hybrid and multi-cloud environments to increase operational efficiency and scalability.

The data center market in Europe is anticipated to expand considerably. The demand for cloud-based solutions, remote work environments, and AI-powered apps is making reliable data processing and storage even more important. Data centers are increasingly choosing to locate in countries like the Netherlands, Ireland, and Denmark due to their favorable tax laws, robust connectivity, and plentiful supply of renewable energy.

Asia Pacific is expected to have the highest CAGR of 13.3% between 2025 and 2032 due to the swift adoption of cloud computing, the expansion of e-commerce, and the digital transformation of numerous industries. Countries like China, Japan, India, and Singapore are controlling the market thanks to significant investments in colocation and hyperscale data centers. The proliferation of 5G technology and IoT devices is driving the need for edge data centers to ensure seamless connectivity and low latency.

The data center market in LAMEA is growing steadily as a result of the government's infrastructure projects and the growing number of people using digital technology. Brazil and South Africa are investing in cloud and colocation infrastructure to support the e-commerce and finance industries. People also want more edge data centers to increase coverage and latency in different places. However, it is challenging to run businesses in several of the region's growing markets due to irregular power supplies and a lack of technological know-how.

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About SkyQuest Technology Consulting

SkyQuest Technology Consulting is a leading Strategy Consulting and Market Research firm, provides syndicated as well as customized research reports and growth consulting services, trusted by CXOs from Fortune 500 Companies, Start-ups, and MSMEs. The company comprises a team of expert research analysts and consultants, adding more than 1200 market research reports in our database each year. These reports offer in-depth analysis on 40+ industries & sub industries across 25 major countries worldwide, serving global clients across diverse industries. The company specializes in delivering customized intelligence, data-driven insights, and strategic advisory services that enable businesses to stay competitive and make informed decisions in rapidly evolving industries.

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