Data Center Infrastructure Sees 18% Growth Amid AI Expansion

What's Happening?

The Data Center Physical Infrastructure (DCPI) market experienced significant growth in the second quarter of 2025, with an 18% year-over-year increase in manufacturer revenue, reaching $8.9 billion. This marks the third consecutive quarter of high-teens growth, driven by the ongoing expansion of artificial intelligence (AI) technologies. Key areas of growth include thermal management, which expanded by 29% year-over-year, and direct liquid cooling, which surged by 156% year-over-year, becoming the standard for large AI clusters. Power distribution markets also grew by 26% year-over-year, supported by the adoption of overhead busways and intelligent rack PDUs for higher-density racks. North America led the growth with a 23% year-over-year increase, fueled by record-breaking gigawatt-scale campus announcements.

Why It's Important?

The growth in data center infrastructure is crucial as it supports the increasing demand for AI technologies, which are central to modern computing and business operations. Hyperscalers and colocation providers, accounting for over 80% of the expansion, play a pivotal role in this AI supercycle. This expansion benefits a range of vendors, from large infrastructure companies like Vertiv to specialized cooling firms such as Munters. The robust growth in this sector indicates a strong demand for AI capabilities, which are essential for advancements in various industries, including telecommunications, security, and networks.

What's Next?

As the demand for AI technologies continues to rise, further growth in data center infrastructure is expected. The expansion of hyperscalers and colocation providers will likely continue to drive the market, with North America maintaining its leadership position. EMEA and Asia Pacific regions are anticipated to gain momentum, contributing to the global growth of the DCPI market. Vendors across the spectrum will continue to benefit from the AI surge, potentially leading to more innovations and advancements in cooling and power distribution technologies.