What's Happening?
The Dell'Oro Group has reported an 18% year-over-year growth in the Data Center Physical Infrastructure (DCPI) market for the second quarter of 2025, reaching $8.9 billion in manufacturer revenue. This growth is driven by the ongoing AI buildout, with significant expansions in thermal management and power distribution markets. Direct Liquid Cooling has emerged as a standard for large AI clusters, while intelligent rack PDUs are supporting higher-density racks. North America leads the growth with a 23% increase, fueled by gigawatt-scale campus announcements. Hyperscalers and colocation providers are central to this expansion, accounting for over 80% of the growth.
Why It's Important?
The sustained growth in data center infrastructure highlights the increasing demand for AI capabilities and the need for robust physical infrastructure to support these technologies. As AI applications continue to expand, data centers must evolve to accommodate higher power and cooling requirements. This growth benefits vendors across the spectrum, from large infrastructure companies to specialized cooling providers. The expansion of data centers is crucial for supporting the AI supercycle, which is driving advancements in various industries, including telecommunications and cloud services.
What's Next?
The growth trajectory of data center infrastructure is expected to continue as AI technologies become more prevalent. Companies may invest further in advanced cooling and power distribution solutions to enhance efficiency and support larger AI clusters. The expansion of data centers will likely lead to increased collaboration between technology providers and hyperscalers, as they work to meet the demands of AI-driven applications. Additionally, regions like EMEA and Asia Pacific are anticipated to gain momentum in data center growth, contributing to the global expansion of AI capabilities.
