Data centre infrastructure market to hit USD $128bn by 2034

The global data centre physical infrastructure market is projected to reach USD $128.27 billion by 2034, up from an estimated USD $36.20 billion in 2025, according to Polaris Market Research.

That forecast implies a compound annual growth rate of 15.09% from 2026 to 2034, driven by rising spending on the equipment and systems that support data centres. These include power distribution, backup power, cooling equipment, cabling and cabinets used in facilities handling cloud computing, artificial intelligence workloads and other data-intensive applications.

Growth drivers

Demand is being driven by the expansion of cloud services across sectors including financial services, healthcare, manufacturing and retail. As operators add processing and storage capacity, they also need more support infrastructure to maintain uptime and manage heat in larger, denser facilities.

Artificial intelligence is also reshaping the market. Training and running AI models can require high-density racks and more intensive thermal management, prompting operators to consider liquid cooling, immersion cooling and software-led tools for managing power and heat.

Smart city projects are another source of demand. Expanding networks of connected sensors, surveillance systems and smart grids generate large volumes of data that need local or regional processing, increasing demand for physical infrastructure at both core and edge data centre sites.

The expansion of eCommerce and high-performance computing adds to those requirements. Operators must support fluctuating loads while reducing the risk of outages that can disrupt digital services and business operations.

Market segments

By component, power systems held the largest market share in 2025 at 31.9%. The category includes uninterruptible power supplies, generators, power distribution units and related equipment used to keep facilities running during grid interruptions and periods of peak demand.

Cooling systems are also changing quickly as some facilities move beyond traditional air cooling. Greater use of graphics processing units and dense server clusters has increased interest in alternative cooling methods that can handle higher heat loads more efficiently.

Supporting hardware such as cable management products, cabinets and cabling remains a fundamental part of data centre construction and expansion. These items may attract less attention than power and cooling systems, but they remain essential for organised, scalable deployments.

On the deployment side, on-premises systems accounted for 58.4% of the market in 2025. Organisations continue to favour on-premises infrastructure when they want more direct control over data security, regulatory compliance, customisation and latency.

Hybrid models are also becoming more common as businesses combine external cloud services with retained in-house capacity. This allows operators to keep certain critical workloads on site while using third-party infrastructure for other applications.

Among end users, the IT and telecom sector held the leading share in 2025. Investment in 5G networks, streaming services and cloud platforms is sustaining demand for the physical systems that underpin data centres.

Healthcare is expected to record one of the faster growth rates over the forecast period. Wider use of telemedicine, digital health platforms and data-intensive medical applications is increasing demand for secure, dependable processing environments.

Regional picture

North America held the largest regional share in 2025 at 40.6%, with the United States accounting for 69.2% of that total. The study attributed the region's lead to high cloud adoption, heavy investment by hyperscale operators and rapid expansion of facilities designed for artificial intelligence workloads.

Europe is projected to grow at a compound annual rate of 13.8% over the forecast period. Data sovereignty rules, more edge computing deployments and a stronger focus on sustainable infrastructure are supporting investment across the region.

Asia Pacific is also expanding as governments and companies pursue digital economy programmes, smart city initiatives and new hyperscale projects. The region's growth reflects rising data use and broader investment in technology infrastructure.

Efficiency challenge

Energy use remains a central issue for the sector. Data centres consume large amounts of electricity, and operators face pressure to improve efficiency while meeting rising demand for computing capacity.

That pressure is creating opportunities for renewable energy integration, modular construction, advanced monitoring systems and software tools that help operators manage power use and cooling performance. The report also highlighted digital twins and smarter power distribution systems as tools that could improve planning and operational efficiency.

The overall direction is clear: as businesses, cloud providers and public sector bodies expand digital services, they will need more physical infrastructure to support the facilities that run them.