Executive Summary

75.6 USD Billion in 2025, the Data Center Equipment Market is expected to grow at a CAGR of 6.2% to reach 138 USD Billion by 2035.

Hyperscale AI buildouts are the primary transmission mechanism: the IEA recorded a 17% jump in global data-centre electricity use in 2025 and projects consumption near-doubling to 950 TWh by 2030, pulling forward orders for power, cooling and networking gear. The EU AI Act’s compute-governance provisions and the EU’s Energy Efficiency Directive rating scheme are pushing operators toward measurable, higher-density infrastructure, while GDPR and the incoming NIS2 resilience obligations are steering hyperscalers toward EU-domiciled capacity rather than cross-border transfer.

North America held 40.0% of 2025 revenue, ahead of Europe at 30.0% and Asia Pacific at 25.0%. Servers led the component split, and large facilities, spanning multi-tenant colocation and cloud regional halls, accounted for 53.2% of size-based demand. FedRAMP authorization remains a prerequisite for US federal workloads, concentrating that demand among a narrow set of certified providers, while China’s PIPL and the EU’s Data Act and Data Governance Act are driving parallel, non-portable regional buildouts rather than a single global footprint.

Integration cost against legacy estate remains the principal constraint on refresh cycles. Competition spans hyperscale-aligned equipment integrators and specialist power-and-cooling vendors, with platform breadth and certification coverage increasingly deciding vendor selection. Operators serving BFSI tenants also weigh DORA resilience-testing and CCPA/CPRA data-handling obligations when qualifying suppliers, and multi-year colocation contracts are shifting a growing share of vendor ARR onto committed capacity rather than spot sales.

Key Takeaways

• From USD 75.61 Billion in 2025, the market reaches USD 137.99 Billion by 2035 at 6.2% a year.
• Servers is the largest component category.
• Large leads on data center size, at 0.5% of 2025 revenue.
• 40.0% of 2025 revenue was earned in North America.
• The report profiles 10 suppliers.

Market Definition and Scope

The Data Center Equipment Market covers the servers, storage systems, network equipment, and power-and-cooling hardware installed inside enterprise, colocation, and hyperscale facilities, alongside DCIM software (typically sold on a subscription or ARR basis) and installation, consulting, and support services. It spans on-premises, colocation, cloud, and edge deployment modes across rack, blade, and modular form factors serving cloud providers, telecom operators building out 3GPP-aligned edge and network-function sites, BFSI, government, healthcare, and retail workloads.

Scope follows the equipment and services purchase decision, not where software runs. A bank sizing redundant power and cooling capacity to satisfy DORA’s operational-resilience testing requirements, or a federal buyer specifying FedRAMP-authorised facilities, is making a hardware and services decision this market captures. Data-residency obligations under GDPR, China’s PIPL, and CCPA/CPRA push equipment toward in-country colocation or on-premises deployment rather than shared multi-tenant regions, and NIS2’s critical-infrastructure security duties alongside the EU Data Act’s cloud-switching provisions are entering equipment specification and vendor-selection criteria alongside price and performance.

Excluded are the data-centre building shell, real estate, and raw electricity supply, plus general-purpose enterprise servers and networking gear sold for non-data-centre office or campus use.

Growth Drivers and Restraints

AI Workload Density Is Forcing a Power-and-Cooling Equipment Refresh

Global data-centre electricity use rose 17% in 2025 to roughly 485 TWh, and the IEA projects a near-doubling to 950 TWh by 2030 as AI’s share of data-centre power climbs from 5-15% to 35-50% over the same period. That demand runs straight into the power-and-cooling segment: UPS, PDU, precision air conditioning and chillers are being resized for rack densities that room-based systems cannot dissipate, pushing operators toward row- and rack-based cooling. Two EU rules now compound this. Delegated Regulation 2024/1364 requires facilities above 500 kW to report power usage effectiveness and cooling redundancy annually from 15 May 2025, and the EU AI Act’s transparency obligations for general-purpose AI models, in force from 2 August 2025, add compute and energy-consumption disclosure on top. Only metered, row-level equipment can satisfy both filings.

Sovereign-Cloud Rules Are Redirecting Colocation Capacity Toward Local Builds

The European Commission’s proposed Cloud and AI Development Act, published 3 June 2026, sets a four-level cloud sovereignty framework built on the in-territory processing logic GDPR has applied to personal data since 2018. It also frames a target of tripling EU data-centre capacity within five to seven years, with public-sector cloud buyers required to meet at least Level 1 in-Union processing. The EU Data Act’s Chapter VI adds a second push: switching charges between processing services, including data-egress fees, are banned outright from 12 January 2027. The companion Data Governance Act, in force since September 2023, sets the neutrality rules for the data intermediaries that make that switching workable. The pattern is not confined to the EU. China’s Personal Information Protection Law and California’s CCPA/CPRA amendments impose comparable in-territory processing pressure, so colocation operators now size hyperscale halls against three separate localisation regimes rather than one.

Vendor-Led AI Implementation Programs Are Pulling Services Spend Into the Refresh Cycle

Microsoft launched its Frontier Company AI-deployment unit on 2 July 2026, backed by a USD 2.5 billion commitment and roughly 6,000 engineers embedded with clients including London Stock Exchange Group and Unilever, two days after Amazon committed USD 1 billion to a comparable effort. Both bundle consulting and integration work directly into hardware refreshes, so the software-and-services line of the component split captures a growing share of each deal, and both vendors book that delivery capacity against recurring contracts rather than one-off licences, lifting the ARR attributable to the refresh cycle. BFSI clients such as LSEG take up these programmes partly to meet DORA’s ICT third-party risk-management standard, applicable from 17 January 2025, which holds regulated entities accountable for the resilience of infrastructure run on their behalf. Public-sector engagements add a second gate: FedRAMP authorization is a precondition before any AI workload can touch federal data. Enterprise IT and BFSI buyers, which lack in-house teams to operationalize AI workloads, absorb this shift first.

Legacy Estate and Compliance Reporting Slow the Refresh Cycle in Older Facilities

Facilities built before granular sub-metering became standard cannot readily produce the power usage effectiveness and cooling-redundancy figures that Delegated Regulation 2024/1364 requires annually from operators above 500 kW. NIS2, transposed across the EU from 17 October 2024, compounds the burden by classifying data-centre operators as essential or important entities subject to incident-reporting duties, so retrofitting metering and DCIM software now has to clear a security-reporting review before it clears a procurement one. That falls hardest on enterprise on-premises operators without dedicated facilities teams. The compliance step precedes the equipment order, not the other way round.

Grid Interconnection Queues Are Delaying Massive and Mega Campus Buildouts

The IEA’s 2025 review of data-centre electricity use flags tightening bottlenecks even as consumption climbs, pointing to grid-interconnection queues rather than equipment supply as the binding constraint on new capacity. Massive and mega campuses, which need gigawatt-class feeds, wait longest for utility approval, pushing hyperscale operators to phase power and cooling orders around confirmed grid dates rather than construction schedules.

Market Trends

Liquid and Rack-Based Cooling Is Displacing Room-Based Systems as AI Rack Density Rises

Global data-centre electricity use climbed 17% in 2025 to about 485 TWh, and the IEA expects AI’s share of that power to rise from 5-15% today to 35-50% by 2030 as training and inference racks push past what room-based air conditioning can remove. Row- and rack-based cooling, plus direct liquid loops, are replacing central computer-room air handlers in new halls. The EU’s NIS2 Directive classifies large data-centre operators as essential entities, and the resilience obligations it imposes are pushing hyperscale and colocation tenancy toward redundant liquid loops rather than single-path air handling. Precision cooling and chiller demand rises faster than server unit counts through 2035.

Forward-Deployed Services Are Consolidating Into the Equipment Purchase Itself

Microsoft’s 2 July 2026 launch of Frontier Company, a USD 2.5 billion AI-implementation unit staffing roughly 6,000 engineers with clients such as London Stock Exchange Group and Unilever, followed Amazon’s USD 1 billion commitment to a similar unit two days earlier. LSEG operates financial-market infrastructure, so its AI deployment contracts must satisfy the Digital Operational Resilience Act (DORA), and vendors able to show ICT third-party risk controls alongside FedRAMP-grade certification are winning the governance layer, not just the rack. Vendors now sell integration and oversight alongside the equipment itself, so services ARR grows faster than hardware unit shipments. Enterprise buyers without in-house AI operations teams increasingly source equipment and deployment as one contract.

Consumption-Based Pricing Is Spreading From Network Access Into Data-Centre Delivery Models

Consumption-based commercial terms are spreading beyond network access into data-centre delivery. Ericsson reported in June 2026 that 71% of fixed wireless access providers now sell over 5G, up from 57% a year earlier, and 57% now offer speed-based tariffs rather than flat plans, the sharpest such shift in four years. 3GPP’s release schedule for 5G-Advanced is set to carry that metered logic into private-network tariffs next. Cloud and colocation buyers are pushing equipment vendors toward the same usage-metered structure, weakening multi-year capital commitments in favor of workload-linked payment for compute and storage capacity. Data-residency terms attached to those contracts increasingly track the EU Data Act’s cloud-switching rules alongside China’s PIPL and the US CCPA/CPRA. A consumption contract now carries a jurisdiction clause as often as a usage meter.

Regional Analysis

North America held 40.0% of the data center equipment market in 2025, the largest of the three regions covered here. Hyperscale capital discipline, not new construction, is what is straining the region’s supply. On Microsoft’s Q1 FY2026 earnings call, held 29 October 2025, chief financial officer Amy Hood said, “We know we’re behind. We do need to spend.” Quarterly capital expenditure reached USD 34.9 billion, roughly half of it aimed at GPU and CPU procurement and data center leases, an outlay funded by cloud ARR growth rather than equipment margin. FedRAMP authorization gates which facilities can bid into federal workloads, and CCPA and CPRA obligations shape how buyers document the data handled inside the racks they order. The binding constraint was power and site availability, not hardware itself. That distinction keeps equipment order books full even as construction timelines slip.

Europe accounted for 30.0% of the market in 2025. Regulation sets the reporting rhythm for the region’s largest facilities. Under Commission Delegated Regulation (EU) 2024/1364, operators of EU data centers with 500 kW or more of installed IT power must file annual energy and water-use data to a central database, with first submissions due in September 2024. Those same operators answer to a wider compliance stack. GDPR governs the personal data crossing their racks, and NIS2 sets incident-reporting duties for the facility itself. DORA extends comparable duties to any site serving a financial-sector tenant. The EU AI Act and the Data Governance Act add further conditions, for model-training sites and cross-border data pooling respectively. That obligation sits alongside a shrinking domestic cloud base: EU-based providers’ share of the European cloud market fell from roughly 29% in 2017 to about 15% by 2022, the dependency figure cited in support of sovereign-cloud rules now under discussion.

Asia Pacific held 25.0% of the market in 2025. India runs its national compute buildout through state-directed procurement rather than corporate balance sheets. The IndiaAI Mission’s common compute facility has onboarded more than 38,000 GPUs through empanelled cloud service providers, under a mission outlay of Rs 10,372 crore. That procurement route, public tender and ministry allocation, contrasts with the corporate-led buildout driving North America. China’s own build-out answers to a different constraint: PIPL localization rules keep data and the servers holding it inside national borders, pushing equipment demand toward domestic suppliers rather than the global vendors serving India’s tenders.

Segment Analysis

Component

• Servers (largest) – Rack, blade, and tower computing systems that house processors and memory to run applications and workloads within a data center

• Rack Servers
• Blade Servers
• Tower Servers
• Mainframes
• Micro Servers
• Storage Systems – Hardware such as disk arrays and storage networks used to retain, organize, and retrieve data generated and processed within a facility

• Direct-Attached Storage (DAS)
• Network-Attached Storage (NAS)
• Storage Area Network (SAN)
• Network Equipment – Switches, routers, and cabling infrastructure that connect servers, storage, and external networks to move data within and beyond the facility
• Switches

• Top-of-Rack Switches
• End-of-Row Switches
• Core Switches

• Routers
• Network Adapters
• Cables and Connectors
• Power and Cooling Equipment – Uninterruptible power supplies, generators, air conditioning units, and thermal management systems that keep hardware powered and within safe operating temperatures

• Uninterruptible Power Supply (UPS)
• Power Distribution Units (PDU)
• Generators
• Precision Air Conditioning

• Room-based Cooling
• Row-based Cooling
• Rack-based Cooling
• Chillers and Cooling Towers
• Software and Services – Data center infrastructure management tools, virtualization platforms, and professional or maintenance services that configure, monitor, and support facility operations

• Data Center Infrastructure Management (DCIM)
• Data Center Management Software
• Consulting Services
• Installation and Deployment Services
• Support and Maintenance Services

Servers lead the component mix, the base compute layer that every workload from virtualization to AI training depends on; the segmentation does not break out an exact share, but server refresh cycles tied to new CPU and GPU generations keep the category ahead of storage and networking equipment. Power and cooling equipment is expanding fastest. Operators are reporting peak rack densities of 30 kW or higher, a threshold that is forcing precision cooling and higher-capacity power distribution into halls designed for lighter loads, and pulling that category’s purchase cycle forward.

Deployment Model

• On-Premises – Equipment installed and operated inside an organization’s own facility, giving the end user direct ownership and control over its physical infrastructure

• Enterprise Data Centers
• Edge Data Centers
• Colocation – A third-party facility where multiple customers rent physical space, power, and cooling to house their own owned servers and networking hardware

• Retail Colocation
• Wholesale Colocation
• Hyperscale Colocation
• Cloud – A deployment model where hardware is owned and run by an external provider, with compute and storage resources accessed remotely as a service

• Public Cloud
• Private Cloud
• Hybrid Cloud

Deployment is shifting away from ownership. Spending routed through cloud and colocation providers reached 73.8% of total compute and storage infrastructure outlay in the fourth quarter of 2024, up from 70.6% three months earlier. Enterprises are moving new capacity off their own balance sheets rather than funding it directly. Hyperscale colocation is accelerating fastest within that channel: hyperscale operators ran 1,360 large data centers by the fourth quarter of 2025, up from 1,297 one quarter before. Each new hyperscale hall adds equipment in bulk, not the incremental additions typical of enterprise-owned sites.

By Data Center Size

• Small – A facility with limited server racks and power capacity, typically serving a single organization’s localized IT and networking needs such as an edge or branch office deployment
• Medium – A facility with moderate rack density and power infrastructure supporting enterprise workloads, colocation tenants, or regional cloud points of presence
• Large (largest, 0.532% share) – A facility with extensive rack capacity and dedicated power and cooling infrastructure supporting multi-tenant colocation, enterprise consolidation, or cloud regional operations
• Massive – A facility spanning multiple large halls or buildings with substantial power feeds, built to house dense compute clusters for hyperscale cloud and content delivery operators
• Mega – A campus-scale facility comprising numerous interconnected buildings with gigawatt-class power infrastructure, built by hyperscale operators to centralize global cloud and AI compute capacity

By End-User Vertical

• Cloud & IT Service Providers (largest, 0.371% share) – Companies that operate hyperscale, colocation, or managed hosting facilities delivering compute, storage, and network services to external customers

• Hyperscale Cloud Providers
• Colocation Providers
• Managed Service Providers
• Internet & Content Providers
• IT & Telecom – Enterprises and network operators that run data center infrastructure to support internal IT systems, software delivery, and telecom network functions like switching and content delivery

• Telecom Operators
• IT Companies
• Network Service Providers
• BFSI – Banks, insurers, and financial services firms that rely on data centers for core transaction processing, regulatory compliance, and secure storage of financial records

• Banks
• Insurance Companies
• Financial Services & Trading Firms
• Government & Public Sector – National, state, and municipal bodies that operate or contract data centers for citizen services, defense systems, and administrative record-keeping

• Defense & Military
• Public Administration
• Public Utilities
• Healthcare – Hospitals, clinics, and health insurers that use data centers to store electronic health records, run diagnostic imaging systems, and support telemedicine platforms

• Hospitals & Clinics
• Pharmaceutical & Life Sciences
• Health Insurance Payers
• Retail & E-commerce – Physical and online retailers that depend on data centers for inventory management, point-of-sale transactions, and customer-facing shopping platforms

• Brick-and-Mortar Retail
• E-commerce Platforms
• Omnichannel Retailers

Cloud and IT service providers are the largest end-user vertical, accounting for an estimated 37.1% of demand in 2025. Hyperscale and colocation operators buy in volumes no enterprise IT department can match, refreshing equipment on cycles tied to new GPU generations. IT and telecom is the fastest-growing vertical. Global 5G subscriptions passed 3.1 billion in the first quarter of 2026, and more than 90 operators have launched 5G Standalone networks, each requiring edge and core capacity that legacy 4G infrastructure cannot support.

Competitive Landscape

The data center equipment market is led by a group of established power, cooling and IT infrastructure vendors rather than a single dominant supplier. ABB, Legrand, Schneider Electric, Rittal, Eaton, Dell Technologies, Honeywell, Vertiv, Delta Electronics and Cisco Systems each hold positions across the equipment stack, from servers and networking to power and cooling.

Competition centers on breadth against depth. Power and cooling specialists such as Vertiv, Schneider Electric, Eaton and ABB compete on integration with data center infrastructure management software and on efficiency credentials, since rack power draw now sets the ceiling on how much compute a facility can host. Dell Technologies and Cisco Systems compete more on server and networking performance per rack and on channel reach through systems integrators. Certification against efficiency and reliability standards, rather than price alone, increasingly decides which vendor gets specified into a hyperscale or colocation build, because a single generator or cooling failure carries a cost far larger than the equipment’s purchase price.

Strategic Outlook

The clearest whitespace is power and cooling equipment sized for AI-dense racks. Uptime Institute’s 2026 survey found operators increasingly running peak densities of 30 kW or higher, a load power and thermal vendors are not yet uniformly equipped to serve. Vertiv, Schneider Electric, Eaton and ABB stand to capture this if grid and site power constraints ease enough for hyperscale build-outs to proceed on schedule.

By 2035, the equipment mix should tilt further from standalone hardware toward power, cooling and software sold as an integrated, density-rated system. Cloud and colocation providers will keep absorbing capacity enterprises once built themselves, concentrating purchasing power in fewer, larger buyers.

Data Center Equipment Market Report Scope