Data Center Hardware Market Size, Share & Trends Analysis Report By Servers (Rack-Mount Servers, Blade Servers, Others), By Storage (Hard Disk Drives (HDDs), Solid-State Drives (SSDs), Others), By Networking Equipment (Ethernet Switches, Routers, Firewalls, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2025-2033

Data Center Hardware Market Size

The global data center hardware market size was valued at USD 74.6 billion in 2024 and is projected to grow from USD 80.8 billion in 2025 to USD 157.5 billion by 2033, exhibiting a CAGR of 8.7% during the forecast period (2025-2033).

The growing number of hyperscale data centers and the requirement for high-speed, low-latency processing are fuelling the growth. Large Companies require economical and high-performance systems to process their complex computational tasks. The market is growing rapidly as organizations need dependable IT infrastructure to work with large volumes of data. Server infrastructure, storage, and networking equipment represent the primary hardware in data centers.

The demand for better, faster, and more powerful data center hardware is rising as cloud computing, AI, and edge computing take center stage. Companies are pouring money into high-performance servers, faster storage, and stronger networking solutions to handle real-time data processing and the growing AI workload.

• In March 2025, The Nvidia Accelerated Quantum Research Center (NVAQC) which will integrate quantum hardware with Nvidia's GB200 NVL72 rack-scale systems in what it calls 'accelerated quantum supercomputing.

Major companies like AWS, Microsoft Azure, and Google Cloud keep upgrading their setups, using high-density servers and NVMe SSDs to boost speed and cut delays. At the same time, NVIDIA and Intel push new AI chips that help with machine learning and deep learning tasks.

Source: Straits Research

Latest Market Trends

Rising adoption of AI and machine learning increasing demand for high-performance computing hardware

AI and machine learning are dominating different industries, and data centers are replacing hardware to keep pace. AI models need high-performance computing resources, so businesses are spending money on high-performance servers, GPUs, and storage systems. These workloads demand high-speed processing, so demand for improved hardware continues to increase. Cloud service providers, hyperscale data centers, and businesses are all deploying AI-ready infrastructure. It is not anymore about storing information—it is about executing it in a timely and efficient manner to serve AI workloads. It is forcing hardware providers to come up with more sophisticated solutions that deal with advanced AI workloads with improved efficiency.

• For instance, according to a White House press conference in January 2025, a joint venture between OpenAI, SoftBank, and Oracle announced a USD 100 billion investment in AI infrastructure, with potential scaling up to USD 500 billion by the end of President Donald Trump’s second term.

With such demand, data center hardware vendors are focusing on AI-optimized architectures to meet the growing demand for machine learning and deep learning applications.

Expansion of hyperscale data centers boosting procurement of high-density and energy-efficient hardware

Hyperscale data centers are growing rapidly, with cloud giants expanding facilities around the globe. These big data centers demand energy-efficient high-density hardware that can handle workloads of epic proportions without guzzling power. Organisations are shifting to next-generation servers, storage systems, and networking gear that provide enhanced performance without blowing up power consumption. AI is also driving this trend, with hyperscalers seeking hardware that can process AI workloads without compromising sustainability objectives.

• For instance, Equinix announced a USD 15 billion joint venture with GIC and Canada Pension Plan Investment Board (CPP Investments) to expand hyperscale data centers in the United States. The investment will fund new xScale facilities exceeding 100 MW, adding over 1.5 GW of new capacity for hyperscale customers, supporting AI and cloud growth.

Such large-scale investments reflect the increasing demand for AI-optimized hyperscale infrastructure, enabling cloud and enterprise companies to scale efficiently while ensuring high-performance data processing capabilities.

Data Center Hardware Market Growth Factors

Growing shift towards edge computing accelerating investments in decentralized data center infrastructure

Edge computing is gaining popularity as it facilitates processing data near the point of need instead of shipping all of it to a cloud hub. This pattern is encouraging data centers to make significant investments in decentralized infrastructure involving servers and storage near users. With real-time processing of data necessary in sectors such as IoT, self-driving cars, and smart manufacturing, edge computing is escalating the market growth.

• For instance, Elisa Oyj, a leading telecommunications company, has deployed its first fully automated edge data center for commercial service, integrating Wind River Studio Cloud Platform. This deployment has reduced staff-hours for commissioning by up to 90%, cut deployment time by 50%, and improved process quality by enabling parallel execution with fewer human errors.

Increasing data traffic and cloud adoption fuelling demand for advanced server and storage solutions

With more and more data being used worldwide, the need for better servers and storage solutions is growing. The demand for cloud services, video streaming, and big data analytics is pushing businesses to buy advanced hardware to handle all that data. From storage to processing, data centers need to keep up with the increasing cloud adoption and large amounts of traffic.

• For instance, in 2024, the total global data volume created, copied, and consumed reached 149 zettabytes. By 2025, this is expected to increase to 181 zettabytes, driven by the rising use of IoT, real-time data processing, and cloud storage.

Market Restraint

Rising hardware maintenance and upgrade costs impacting data center profitability

Maintaining and upgrading data center hardware is getting expensive. As businesses keep adding high-performance servers, storage, and network equipment, they also have to spend more on keeping everything running smoothly. Old hardware needs constant upgrades to stay efficient, which just increases the costs. For small and mid-sized data centers, managing these costs is becoming a real struggle, since budgets are tight and hardware prices keep going up.

• For instance, Singapore’s Senior Minister of State for Health, Dr. Janil Puthucheary, confirmed that hardware failures in data centers caused two major IT outages in August and September 2022. These failures affected 17 public healthcare institutions, leading to longer patient wait times, delays in dispensing medication, and appointment rescheduling. The breakdown of hardware devices in firewall zones disrupted essential healthcare operations, showing how equipment failures can have major consequences.

Market Opportunity

Rising government initiatives and investments in digital infrastructure driving data center hardware demand

Governments are spending more money into digital infrastructure to support the growth of cloud computing, AI, and fast internet. As digital transformation spreads, countries are demanding more data centers by encouraging local hardware production and improving cybersecurity. These actions are making the demand for new data center hardware increase. With such investments, data centers are looking to upgrade their systems to handle the growing digital needs across industries.

• For instance, China has invested over 43.5 billion yuan ($6.12 billion) in its "Eastern Data, Western Computing" project, a nationwide initiative aimed at expanding data centers. According to China’s National Data Bureau, the project has led to the construction of eight major data center hubs, attracting over 200 billion yuan in total investments. This move comes as China looks to strengthen its domestic high-performance computing capabilities.

Regional Insights

North America: Market leader with expanding data center

North America is witnessing rapid expansion of the data center facilities which is propelled by the surging demand for AI adoption, growing digitization across diverse end use sectors, ongoing technological advancements, increased data processing demands etc. The U.S. stands as a premier hub for data center hardware demand where the growth is attributed majorly to the presence of global technological giants comprising primarily of Google (Alphabet Inc.), Apple, Microsoft, Meta, IBM, Oracle, Salesforce, X Corp etc. which undertake loads of data storage and processing round the clock, thus require a robust and resilient data center hardware components to handle terabytes of data, reduce the downtime and ensure continuous and reliable operation in peak hours.

Asia Pacific: Fastest growing region with the highest market CAGR

Data center hardware development in the Asia Pacific is growing at a significant rate as major companies are taking the strategic initiative to increase their market share through investing in technological innovations, strategic partnerships, and mergers and acquisitions.  With rising hyperscale and colocation, data centers infrastructure hardware such as servers, networking gear, and storage are in higher demand because there is a big focus on extremely density-configured technology and energy efficiency. South Korea, China, India, and Japan are emerging in their roles due to their favorable policies, lower operating expenses, and increased organizational uptake of cloud-based services.

Countrywise Insights

The market is experiencing dynamic growth and diversification across the globe, with each country contributing uniquely to the advancement of this transformative field.

• United States- The U.S. dominates the Data Center Hardware Market, With Virginia handling over a third of global internet traffic and California's strong presence, the U.S. leads in data center hardware demand. Hyperscale and colocation expansions further drive the need for high-performance servers, storage, and networking equipment.
• China– China’s USD 6.1 billion investment in data centers, with 1.95 million server racks planned, is accelerating demand for servers, storage, and networking gear, reinforcing its position as a major hardware market.
• Japan- Government incentives are decentralizing data centers from Tokyo and Osaka to Hokkaido and Kyushu, boosting demand for energy-efficient hardware. Major investments from SoftBank and CyrusOne add to market expansion.
• Germany- Germany’s colocation sector contributed USD 11.27 billion to GDP in 2023, pushing demand for high-performance computing and networking solutions. Sustainability initiatives and regulatory compliance further support market growth.
• UK– DC01UK’s USD 4.1 billion investment in a new data center is driving demand for advanced hardware. AI and cloud computing adoption continue to boost server and storage deployments.
• France- Microsoft’s USD 4.3 billion investment in AI and cloud infrastructure, with 25,000 GPUs planned, is strengthening France’s data center hardware market and accelerating digital transformation.
• South Korea - Samsung’s launch of a 116,000-server HPC center, using energy-efficient ORV2 technology and high-performance storage solutions, is propelling demand for data center hardware.
• India-With millions relying on digital payments, e-commerce, and social media, India’s data center market is booming. Government policies, 5G expansion, and data localization push demand for scalable hardware solutions.

Segmentation Analysis

By Servers

Rack-mount servers are dominant in the market because of their scalability and ease of use. These servers are preferred by companies as they easily plug into already existing infrastructure without any heavy modifications. They are economical, making them suitable for use in businesses, particularly in larger data centers. However, blade servers are catching up gradually. In the upcoming years, blade servers may even take over from rack-mount servers. This is due to the fact that they provide greater density and are more power-efficient in power usage and space. Most companies are beginning to consider blade servers more seriously, particularly since the demand for improved performance and power efficiency is on the rise.

• For instance, Rostelecom is set to buy a large Moscow data center, adding 4,000 racks to expand capacity.

By Storage

Solid-State Drives (SSDs) segment holds the largest market share. SSDs are taking over because they provide speed and reliability, something HDDs simply cannot compete with. Quick data processing is a requirement now, and old hard drives simply cannot keep pace. Efficiency is another huge reason businesses are switching to SSDs—less power consumption, less heat generated, and a longer lifecycle. That saves money over time. High-performance applications require fast and long-lasting storage, and SSDs fit the bill.

• For instance, Samsung and LG Uplus are pioneers in NVMe SSDs encouraging segmental growth. IT & Telecom, Finance and healthcare sectors significantly invest in SSD storage to meet real-time processing and regulatory compliance demands.

By Networking Equipment

Routers are dominant as they steer network traffic in an efficient manner, allowing data to go where it should. In data centers, routers are essential in terms of handling and directing data from servers to networks. As cloud computing and intense data usage are on the rise, routers are gaining prominence in order to maintain smooth operations. They assist in keeping performance constant despite high volumes of traffic. As a result, companies are significantly spending on state-of-the-art router technology to accommodate increasing network demands.

• For instance, In March 2023, Arista Networks introduced the Arista WAN Routing System, combining a high-speed enterprise router, carrier-neutral internet relay, and Cloud Vision Pathfinder Service to simplify and optimize wide area networks for businesses.

Company Market Share

Key players in the industry are focus on adopting key business strategies, such as strategic collaborations, product approvals, acquisitions, and product launches, to gain a strong foothold in the market.

WesternDigital Corporation: An emerging player in the Data Center Hardware Market

Western Digital Corporation is an emerging player in high-performance storage solutions, specializing in enterprise-grade hard drives and SSDs that power data centers, cloud computing, and AI-driven workloads.

Recent developments by IPRally Technologies Oy:

• In March 2025, Western Digital strengthens its data center hardware market position with new 32TB UltraSMR and 26TB CMR HDDs, enhancing storage efficiency for hyperscale, cloud, and enterprise customers.

Recent Developments

• In December 2024, Equinix collaborates with Dell Technologies to enhance private AI solutions using the Dell AI Factory with Nvidia. This expands AI-ready infrastructure across Equinix’s 260+ data centers, boosting enterprise AI adoption
• In August 2024, Alameda Healthcare Group partners with Dell to establish a data center in Cairo, Egypt. Dell will supply IT equipment, advisory services, and infrastructure solutions to enhance Alameda’s digital healthcare operations.

Analyst Opinion

The data center hardware market is growing rapidly due to rising demand for high end blade servers, storage, and network equipment. Big data centers such as hyperscale and colocation companies are investing into more powerful computing, and energy-efficient solutions to handle the huge amounts of data needed. Further, countries in Asia Pacific and Europe are expanding their power capacity will propel market expansion. However, there are some challenges like power cost challenges and government regulations. Companies are focusing towards sustainability, with adopting new energy efficient technology will drive market growth.