Global Data Center Market to Hit the Market Valuation of US$ 792.29 billion by 2032 | Spending Remains Strong Despite Economic Slowdown Says Astute Analytica

Data center market is booming, with hyperscalers and edge computing driving massive growth. Demand for cloud services, AI, and IoT fuels investment, making data center solutions faster and more efficient. While security and workforce challenges exist, the distributed nature of edge computing promises lower latency and operational cost savings.

New Delhi, April 04, 2024 (GLOBE NEWSWIRE) — Global data center market is projected to hit the market valuation of US$ 792.29 billion by 2032 from US$ 328.10 billion in 2023 at a CAGR of 10.64% during the forecast period 2024–2032.

The global data center market is massive, with approximately 8,000 data center locations worldwide as of 2024.  Worldwide data center capital expenditure (capex) grew by 4% in 2023, reaching $260 billion, with servers leading all technology areas in revenue. However, this marked a slowdown from the double-digit growth in the previous year.  Globally, I.T. data center spending is expected to reach $222 billion in 2023, up from $212 billion in 2022 and $216 billion in 2021.

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Cloud spending is a major driver of data center growth in 2024. Public cloud services spending is expected to grow by 20.4% in 2024, due to both price increases by cloud vendors and increased utilization. Cybersecurity investments are another significant factor, with around 80% of CIOs planning to increase their spending on cyber/information security in 2024. Advancements in accelerated computing for AI applications, like Nvidia’s expected delivery of 100,000 AI server platforms in the current year, and expanding data center footprints are also poised to drive market growth. Investments in the Mexico data center market specifically are expected to reach USD 1.32 billion by 2029, with a CAGR of 8.60%.

Despite lingering economic uncertainties and an expected slowdown in overall IT spending growth to 6.8% in 2024 (down from 8% forecast previously), data center spending by businesses remains strong. Some Wall Street analysts expect a dramatic slowdown in cloud computing spending by major tech firms. However, others believe 2022 capex spend targets and business trends for hyperscalers remain solid. Weaker economic sectors do exist, but data center construction for manufacturing and alternative energy is offsetting this.

Data center operators anticipate a temporary dip in demand growth due to economic headwinds, leading to longer sales cycles in 2023.  However, overall demand for data center space remains robust and continues to outpace supply. Most experts predict that while near-term growth may slow, they remain bullish on the longer-term outlook. From a vendor perspective, Schneider Electric, Vertiv, and Eaton were the top 3 data center physical infrastructure providers in 2023, with all experiencing double-digit revenue growth.

Key Findings in Data Center Market

Market Forecast (2032) US$ 792.29 billion
CAGR 10.64%
Largest Region (2023) North America (35.20%)
By Component Solution (65.92%)
By Type Co-location (40.08%)
By Enterprise Size  Large (69.51%)
By Industry ICT (33.49%)
Top Trends
  • Rapid growth of cloud services and hyperscale data centers
  • Edge computing and micro data centers for low-latency processing
  • Sustainability focus with renewable energy and efficient cooling technologies
Top Drivers
  • Exponential data growth from IoT, AI/ML, and digital transformation initiatives
  • 5G network deployments enabling new edge computing use cases
  • Increased enterprise adoption of hybrid and multi-cloud strategies
Top Challenges
  • High energy consumption and environmental impact of data centers
  • Ensuring data security and privacy in distributed edge environments

Market Analysis: High Demand for Solution from Large ICT Enterprises Shaping the Global Data Center Market

The solution segment currently dominates the global data center market, commanding over 65% of revenue share. This is driven by the explosion of data generation due to technologies like IoT, cloud computing, and AI. To store and manage this data, IT and telecom companies prefer the cost-efficiency and security of third-party data centers.  However, the services segment is experiencing rapid growth, with a projected CAGR of 11.29%.  This reflects the increasing demand for cloud-based services, with major cloud providers like Amazon, Microsoft, and Google becoming some of the biggest customers for data center operators. In 2022, hyperscalers alone accounted for over 50% of global data center leasing activity.

Large enterprises are the primary drivers of data center market growth, accounting for over 69% of the global market. Their increasing reliance on cloud computing, big data, and IoT technologies necessitates a robust IT infrastructure that many find easier to outsource to third-party data center providers.  To manage explosive data growth, large enterprises are rapidly moving workloads to the cloud. These digital-first strategies demand modern infrastructure to support innovation.  This shift is underlined by statistics showing the average enterprise uses multiple public and private clouds and is heavily invested in cloud infrastructure spending.

The ICT industry dominates the data center market with a projected share of over 33.49%. Its rapid expansion is fueled by cloud computing, 5G networks, IoT, and AI.  Cloud migration, in particular, is a significant driver, with the global cloud IT infrastructure market seeing remarkable growth. Telecom operators are also heavy investors as they build data centers to support 5G networks. Additionally, data-intensive sectors like blockchain and machine learning are placing specialized demands on data center infrastructure. Hyperscalers within ICT are the major customers and operators of data centers, leveraging economies of scale to drive innovation, sustainability, and an evolving, competitive landscape.

The Future of Hyperscale Data Center Market: Efficiency, Expansion, and Carbon Neutrality Goals

As of 2022, there were over 700 hyperscale data centers worldwide, operated by more than 30 companies. The average hyperscale data center spans over 200,000 square feet and consumes 20-50 megawatts of power. In 2022, hyperscalers leased a record-breaking 1,087 megawatts of data center capacity globally. Hyperscale data centers can achieve up to 40% lower TCO (total cost of ownership) compared to traditional data centers. Amazon Web Services operates over 80 availability zones across 25 geographic regions worldwide. Microsoft Azure has 60+ regions, more than any other cloud provider. Google Cloud operates 27 cloud regions and 82 availability zones globally. Alibaba Cloud, the largest cloud provider in Asia, operates 25 regions and 80 availability zones.

The top 5 hyperscale spenders across global data center market are were Amazon ($18.6B), Google ($13.1B), Microsoft ($12.4B), Facebook ($11.7B), and Apple ($7.5B). In 2021, hyperscalers deployed over 6,000 prefabricated modular data centers globally. The average PUE (power usage effectiveness) of a hyperscale data center is 1.2, compared to 1.8 for traditional data centers. In 2022, hyperscale data centers consumed an estimated 100-150 terawatt-hours of electricity, or 0.5-1% of global electricity use.

  • By 2030, hyperscale data centers could consume up to 8% of global electricity demand if efficiency gains don’t keep pace.
  • Microsoft has pledged to be carbon negative by 2030 and remove all historical carbon emissions by 2050. Amazon aims to power 100% of its operations with renewable energy by 2025. Facebook has committed to reaching net zero emissions across its value chain by 2030.
  • Alibaba Cloud aims to have its data centers running on 100% clean energy by 2030.

Edge Computing is the Future of Data Center Market

The edge data center market is poised for significant expansion. Its global market size is expected to reach a staggering $33.9 billion by 2028, demonstrating a remarkable CAGR of 23.1% from 2021. Data processing is undergoing a fundamental shift away from traditional centralized data centers. By 2025, a massive 75% of enterprise-generated data will be created and processed at the edge, a sharp contrast from only 10% in 2018. This translates to a surge in new edge data center deployments expected to grow by 226% between 2019 and 2025. Moreover, by 2028, 90% of industrial enterprises will utilize edge computing, solidifying its critical role in modern infrastructure. As per Astute Analytica, global edge computing capacity is forecast to grow at a staggering 50% CAGR between 2020 and 2024. This growth underscores the importance of edge processing to handle the influx of data, with 51% of data expected to be stored and processed at the edge by 2024 (compared to 49% in core data centers). Investments in edge computing are expected to reach a massive $800 billion by 2028. In particular, telecom operators in the data center market are poised to invest a significant $500 billion in edge computing development over the next decade. Additionally, 57% of mobility decision-makers plan to invest in edge computing within the next year, further demonstrating strong industry interest.

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5G networks promise to be a major catalyst for edge data centers, with deployments expected to increase by 5x by 2025. The explosive growth of IoT devices, expected to generate 79.4 zettabytes of data by 2025, significantly drives the need for edge processing capabilities. Furthermore, by 2025, 50% of new enterprise IT infrastructure will be deployed at the edge, showcasing the widespread adoption across industries.

  • Benefits and Challenges
  • Edge data centers offer significant latency advantages, achieving a 50% reduction compared to traditional centralized data centers. Cost savings are another compelling benefit, with edge computing potentially reducing data transmission costs by 50%. In areas like manufacturing, the power of Edge AI is expected to dramatically improve operational efficiency by 45%. While compelling, edge computing deployments do face challenges – 33% of organizations highlight security concerns and 32% cite the lack of skilled workers as top adoption barriers.
  • Ecosystem Evolution
  • The edge data center ecosystem is predicted to grow 4x by 2028, encompassing data centers, nodes, and a vast array of edge devices. Colocation providers are anticipated to play an increasing role, operating 50% of edge data centers by 2028, a dramatic increase from the 10% share in 2020.

Top Investments to Reshape the Data Center Market

  • AWS to Invest $10 Billion in New Data Centers in Mississippi in 2024

In 2024, AWS has already said it will invest $10 billion to construct new data centers in Mississippi.

  • AMD’s Data Center Revenue Reaches $6.5 Billion in 2023

Demand for AMD’s high-performance data center product portfolio is accelerating as AI reshapes the market thanks to AMD chips such as its Instinct GPUs and fourth-generation EPYC CPUs. The longtime Silicon Valley semiconductor company generated $6.5 billion in data center revenue during 2023.

  • American Tower Partners with IBM for Edge Data Centers in 2024

In 2024, American Tower formed a partnership with IBM where its Access Edge Data Center ecosystem will now include Red Hat OpenShift and IBM Hybrid Cloud.

  • Digital Realty Joins Asia-Pacific Data Centre Association in January 2024

Digital Realty, a real estate investment trust that owns and operates data centers, recently joined the Asia-Pacific Data Centre Association (APDCA) in January 2024 with the goal of engaging with governments to co-develop policies.

  • NTT Communications Pledges $11 Billion Investment in Data Centers Over 5 Years

In 2023, NTT Communications, the parent company of NTT Global Data Centers, pledged to invest US$11bn on data centres over the next five years.

  • Cloud Providers Boost Italian Data Center Space by Over 60%

New developments by cloud providers are boosting the Italian data center market space by more than 60%.

  • Microsoft, Oracle and Google Open Data Centers in Switzerland in 2024

With Microsoft, Oracle and Google all opening data centres in Switzerland this year, the sector will see dynamic change and likely consolidation.

  • AI Progress Fuels Transformative Shifts in Data Center Strategies

The exponential progress of artificial intelligence (AI) and machine learning is fueling a wave of transformative shifts in data center design, site selection, and investment strategies.

Global Data Center Market Key Players

  • Amazon Inc.
  • Dell Technologies
  • Digital Realty
  • Equinix, Inc.
  • Google LLC
  • Hewlett Packard Enterprise Development LP
  • IBM Corporation
  • Microsoft Corporation
  • N+ONE Data Centers
  • NTT DATA, Inc.
  • Oracle Corporation
  • SAP SE
  • Other Prominent Players

Key Segmentation Overview:

By Component

  • Solution
  • Services

By Type

  • Co-location
  • Hyperscale
  • Edge
  • Other

By Enterprise Size

  • Small and Medium-Sized Enterprises (SMEs)
  • Large Enterprises

By Industry

  • Banking, Financial Services & Insurance (BFSI)
  • Information and Communication Technology
  • Government Agencies
  • Energy & Utilities
  • Healthcare
  • Other

By Region

  • North America
  • Europe
  • Asia Pacific
  • Middle East & Africa (MEA)
  • South America

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About Astute Analytica

Astute Analytica is a global analytics and advisory company which has built a solid reputation in a short period, thanks to the tangible outcomes we have delivered to our clients. We pride ourselves in generating unparalleled, in depth and uncannily accurate estimates and projections for our very demanding clients spread across different verticals. We have a long list of satisfied and repeat clients from a wide spectrum including technology, healthcare, chemicals, semiconductors, FMCG, and many more. These happy customers come to us from all across the Globe. They are able to make well calibrated decisions and leverage highly lucrative opportunities while surmounting the fierce challenges all because we analyze for them the complex business environment, segment wise existing and emerging possibilities, technology formations, growth estimates, and even the strategic choices available. In short, a complete package. All this is possible because we have a highly qualified, competent, and experienced team of professionals comprising of business analysts, economists, consultants, and technology experts. In our list of priorities, you-our patron-come at the top. You can be sure of best cost-effective, value-added package from us, should you decide to engage with us.

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