Data Centers Continue To Grow But Will The Growth Last?

Data centers have been growing rapidly in the past few years. Almost every corporate environment has now embraced a cloud operating model so they need remote computing power and storage. In addition, the growth in the use of artificial intelligence (AI) has led to the need for more and more computing power for these AI services.

The past five years have been a perfect storm for data centers globally. Every company needs more power for applications, more storage, and AI is generating a huge increase in the need for much more computing power than ever before.

Globally, data centers generated $272 billion in revenue in 2017. Last year this was $416 billion. By 2029, analysts predict that we will be seeing revenue of around $624 billion. The need for data centers is estimated to keep increasing, driving revenue growth of around 8.37% per year to the end of this decade.

This is causing some infrastructure issues. Goldman Sachs has estimated that power consumption in data centers will increase by 160% by 2030. Their data estimates that a question to ChatGPT uses ten times the electricity of a Google search. Around 1-2% of all power generated globally is now consumed inside data centers.

But some interesting new research, just published in January 2025, does explore the idea of a plateau, a leveling off in this constant growth in the need for more data centers. It’s not that we will not need more data centers in future, just that the current spending levels cannot keep on at this pace.

For example, spending on data center hardware and software grew by 34% in the past year. Spending on public cloud infrastructure grew by 48% in the past year. These figures are far greater than the trending growth over several years so it is likely that some form of correction is due soon.

Tech journal, The Register, commented on this research: “One of the effects of this has been to propel chief GPU maker Nvidia into the upper echelons of the datacenter suppliers, especially to the hyperscale operators. It joined long-standing infrastructure providers such as Inspur and Supermicro, while various “white box” original design manufacturers (ODMs) continued to dominate hyperscale spending.”

The message is clear. The long-term trend remains for solid and consistent growth in the need for data centers. Cloud adoption is increasing and AI growth will continue as more enterprises adopt AI-powered solutions and more consumers use these solutions in their personal life too.

But the hyper-growth of 2024 is unlikely to be repeated year-on-year. This may affect share prices for some of the companies providing hardware into data centers, but overall the news is positive. Any business working with data center hardware or software will see consistent growth into the 2030s, but maybe not at rates such as 48% each year.

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