Data center cooling set to transform infrastructure as market nears $34B by 2033

Cooling climbs into the spotlight as spending shifts

Verified Market Reports says the global data center cooling market will reach USD 34.12 billion by 2033, growing at about a 10.3% compound annual rate. That headline-sized number matters because cooling is no longer a backroom expense — it is a central part of how data centers are designed, run and upgraded.

The report, issued this week and summarized in industry releases, captures a simple economics story: compute is getting hotter and denser, energy rules are tightening, and operators are buying new types of cooling gear rather than sticking with decades-old systems. For investors and managers, the forecast implies a steady multi-year stream of capital spending and a shift in demand toward higher-value equipment and services.

Why demand is accelerating: hyperscalers, AI racks and tighter energy targets

Hyperscale cloud builders keep adding capacity. When a large cloud operator commits to new regions or huge buildouts, it orders thousands of cooling units and related infrastructure. That creates big, lumpy waves of demand for OEMs and systems integrators.

AI and high-performance computing have raised rack power densities. A few years ago a rack might draw a few kilowatts; modern AI racks can draw many times that. Higher density increases the heat load per square foot, forcing site owners to upgrade air handling, switch to liquid cooling, or add localized heat removal systems.

Energy efficiency targets and sustainability promises are pushing firms to lower their PUE — a basic measure of how much energy a data center uses for cooling and support versus actual computing. Stricter corporate or regulatory PUE goals usually mean fresh spending on better chillers, in-row cooling, or heat-recovery systems.

Cloud adoption remains broad and steady. When enterprises move workloads to the cloud, they indirectly drive hyperscalers’ capex plans, which in turn sustain demand for cooling equipment. Meanwhile, edge rollouts for 5G, content delivery and industrial use create many smaller sites that need compact, efficient cooling solutions.

Which technologies and regions will lead growth — immersion, liquid cooling and APAC momentum

Technology mix is shifting. Traditional air-cooled systems such as CRAC and CRAH units still account for much sales volume, especially for retrofit and colocation facilities. But higher-margin growth is in liquid-based approaches: direct-to-chip liquid, rear-door heat exchangers, and full immersion cooling for the densest installs.

Immersion is notable because it changes the stack: it can cut energy use, shrink floor space needs and reduce complexity of air-handling systems. That tends to attract hyperscalers and specialized HPC users first, then broader adoption in service providers and select enterprise pockets.

Regional patterns matter. North America will remain a core market because of large cloud providers and dense enterprise demand. Asia-Pacific, led by China, India and southeast Asian hubs, is where capacity growth is most rapid and where much of the projected CAGR comes from. EMEA will see steady growth driven by policy and sustainability push, but its pace is more varied by country.

What investors should watch: suppliers, operators and capex/M&A signals

Translate the market forecast into investor terms and you get a few clear themes. First, suppliers that can deliver liquid and immersion systems, modular integrated solutions, or value-added services (installation, monitoring, maintenance) are better placed to capture higher-margin revenue than makers of generic air handlers.

Second, data-center owners and colocation operators face a capex decision: invest now in efficiency and future-proofing or accept higher operating costs and likely retrofits later. Operators with scale or recurring service revenue will be more resilient; smaller operators may be squeezed.

Third, hyperscalers remain the power buyers. Their capex cadence and deployment choices will ripple through the supply chain. Watch capex guidance and build plans from big cloud players for near-term demand signals.

Finally, expect deal activity. As immersion and liquid cooling move beyond trials, strategic acquisitions and partnerships are likely as larger equipment makers buy technology specialists to avoid being disintermediated.

Key caveats: assumptions, sensitivity to energy and technology adoption

All market studies rest on assumptions. The headline CAGR assumes steady uptake of liquid and immersion technologies and continued hyperscaler expansion. If energy prices swing sharply, if hyperscalers slow capital spending, or if novel cooling approaches fail to scale, the market could undershoot the forecast.

Supply-chain constraints or sudden regulatory shifts (for example on refrigerants or local permitting) would also change timing and mix of spending. Remember that a single report smooths regional and customer-level volatility into a single global projection.

Actionable signals: KPIs, earnings cues and events to monitor

For the next 6–18 months, investors should track a short list of concrete signals. Watch PUE trends and public disclosures from large data-center pools; falling PUE backed by capital upgrades signals rising demand for modern cooling. Monitor hyperscaler capex guidance and new region openings — those announcements usually preface large equipment orders.

Look for product wins and public case studies of immersion or direct-to-chip deployments. On the supplier side, monitor order backlogs, lead times and gross margins; rising lead times and improving margins point to pricing power. Finally, read earnings calls for comments on tender activity, pilot-to-production conversions, and any M&A talk: these items will tell you if the market forecast is turning into cash on supplier balance sheets.

Sources

• prnewswire.com