A new year means new trends and opportunities. And in the data center industry there are certainly a lot of possibilities to be had.
The segment is coming off a very hot and dynamic 2024 in which there were a lot of changes and new developments. According to a survey by Dell’Oro Group, in 2024, only the IT giants poured more than $180 billion into data center expansions. Amazon, Google, Meta, and Microsoft are the leaders in the area, and they increased their investment by 81% just during the third quarter of 2024.
The main reason for the increased data center boom is mostly due to the increased demand for AI services. The tech giants are experiencing a rise in the demand of AI and they are betting this will continue to be the case in the future. So they are heavily increasing their investments in order to get ready for the AI era.
AWS, Azure, and Google Cloud accounted for roughly 80% of the total Q3 spending, Dell’Oro says. They are also the three companies with the highest spike in capital expenditures and also AI revenues in the same period. All of them are expected to continue with more of the same for the next few months at the very least.
Naturally, this is reflected in other companies, too. Nvidia is among the big winners as the company’s AI chips are the main choice of virtually all of the IT giants for their data centers. As a result, the company netted nearly double its revenue in Q3 2024, compared to Q3 2023.
And now as we enter a new year, the data center craze is far from over. In fact, in certain areas it’s just beginning. It will be yet another dynamic year for the data center with a lot of expectations already formed. Let’s see what are the ten most common trends for data centers in 2025.
Lots of building… and make them big!
The biggest trend, as usual, will be the increased pace of construction of new data centers. Small facilities are becoming rarer as the focus shifts to big campuses and hyperscale data centers. AI will help as it can provide project management tools that oversee the construction efforts, including scheduling, resource allocation, budget and risk management.
Mixing AI with sensors and equipment can help improve the quality control of the construction projects, too. AI can help monitor construction activities and progress in real time and will flag possible issues or even deviations from the specifications or safety standards. All of this can happen in real time. The speed of construction and putting new data centers into operation will also be incredibly important. Currently, there’s high demand and the new capacity coming online is not enough to even offset the rise of demand. As such, focus on new building techniques and materials is also going to go towards options which can improve building times while keeping quality high and the environmental impact low.
Location is as key as ever, but for different reasons
Of course, location will continue to be one of the most important factors when building a new data center. While the main criteria used to be cooler climate and ease of access to green energy, now the priorities are changing. Such locations are becoming scarce – on the one hand the resources aren’t infinite, and on the other the available land is harder to come by and is even more expensive. Also, AI workloads tend to prefer low latency and faster connections, and thus data centers closer to the main cities and/or industrial parks are becoming trendier.
Energy and land availability limitations also force data center operators to build closer to traditional power plants. This limits the resources needed for grid improvements and also helps grid management and balancing. Additionally, some countries are imposing limits for data centers while others are making them a national priority. This will naturally have an effect on the location choices, too.
Sustainability will not be forgotten
With all of that happening, especially with the news that some hyperscalers are now thinking of powering up old nuclear plants for their facilities, there are some justified worries, that the data center industry may have put sustainability on the back foot.
That’s not the case. Green efforts are still happening and in many areas. Operators are working on optimizing all aspects of data centers as it’s needed to achieve the ambitious goals that were set up before the AI boom. And no company wants to roll them back, as it would be seen as a failure and very bad for their clients – many of whom are relying on green data centers in order to achieve their own sustainability goals.
For data centers, we can expect more focus on energy management software, continuous improvement on the hardware front, and cooling. Many operators will also look for additional certifications and carbon offsetting via external partnerships in order to keep their overall carbon footprint as low as possible.
Data center design improvements
A key solution to many of the new challenges for data centers is improving their design. This includes increasing rack densities, optimizing the overall layout for better airflow, energy usage and squeezing in as many servers as possible. Unfortunately, it is (was) difficult to know which layout would be as great as expected without actually testing it in true conditions. Thanks to AI and digital twins, it’s now possible to test many different layouts and designs to see which ones would be the best.
Improved designs will also lead to better maintenance. Data from sensors, along with AI and specialized software will help to make the most out of the new layouts many of which would seem impossible before or not sufficient enough. It will address the constant need for increasing rack densities and optimize them for specific workloads.
Of course, AI will be king
AI has already taken over the industry and it will continue to be the driving force for many of the future decisions. In 2024, we saw that many operators started to make “AI data centers” – facilities which are tailored for AI workloads. This means more GPUs and AI-specific hardware which tends to be different than the one needed for more traditional uses like cloud, hosting, colocation, etc.
AI also is an opportunity for data center refocusing. Facilities that were built mainly for crypto for example, were remodeled to accommodate more AI workloads. Many of the new projects are also built from the ground-up with AI as a main priority which means specific steps to be made not only for the layout and hardware, but also for the location and energy supply as AI hardware tends to need a lot more electricity. As such AI has become a “decision maker” as many of the steps and actions operators need to do are governed by their need to offer resources for this technology.
Edge computing will continue to expand
Edge computing has had quite the eventful 2024. The concept is enjoying a rise of interest and it’s to be expected. With data centers becoming overloaded and the demand for computing power skyrocketing, edge computing is emerging as a vital companion and ally for the bigger facilities. The Edge is able to offset a lot of the computing load of the data centers, making the calculations closer to the source and easing the strain on the facility and the network.
It’s also another business opportunity for operators to offer, so it seems like a win-win. As such, expect the focus on edge computing to continue. Especially since it’s no longer viewed as an alternative to data centers, but an asset which is helping them offer an even better service.
The energy supply will remain one of the biggest challenges
In 2024 there were several studies which claimed that data centers will run out of power within 24 months. Then the timetable was shortened to 18 months or less. Also, several countries imposed limits on how much energy may be allocated towards data centers while other businesses and organizations complained that they are taking the increased prices for the costs imposed by data centers for the increased consumption and grid improvements. Why? Because many operators are using PPAs to get better and lower rates thus ensuring cheaper energy, especially compared to other businesses.
Regulators are trying to put a cap on this approach. And despite it, there’s the sheer physical limit of not enough energy being produced to go around for everyone. This leads to operators going for other options, including small modular nuclear reactors to secure much needed electricity for their needs.
Even more autonomous data centers
Automation has always been a top trend for data centers. It’s even more important now as these facilities are becoming bigger and more complex. Obviously, AI will have a big role here, but automation is not only AI. There are other algorithms and methods which can help improve the overall daily work of data centers and their maintenance.
Automated management systems can help allocating resources wherever they are needed and will base these decisions on real-time data along with forecasting, based on data from actual events. Good automation will make daily operations easier, will improve the overall efficiency of data centers which will lead to better maintenance and lower costs. Security is also part of automation and a key component of modern data centers which they can and have to offer to customers.
Cooling and heat reuse efforts continue
Depending on the analysis, cooling takes around 40% of a data center’s total energy usage. It’s also the most important component in order to make sure the hardware is working properly, up to its fullest potential and is kept safe from overheating and failure. To improve cooling efficiency we can’t just increase the fans and their power. Special algorithms are being now used to analyze all of the details, including airflow patterns, temperature fluctuations, hotspot pinpointing and other factors, even how the surrounding materials are absorbing and dissipating heat to choose the best solutions.
Heat reusing is another trend that is even more important for data centers which are now closer to residential and business areas. Some operators are exploring options to use the heat their facilities create to resell it to local buildings cheaper than regular heating and thus making it an attractive offer.
Don’t forget regulations
Finally, regulations will still be a driving force in the industry. As mentioned above, some countries are already imposing various limits on data centers for both new constructions and energy usage. Not only that, but there are additional regulations coming into effect. The EU is focused heavily on sustainability and energy efficiency and it’s regularly introducing new requirements or adapting previous ones.
The same is happening around the globe. Data center operators must be on a constant regulatory lookout and be ready to adapt to all of the new laws coming out. All while keeping up with the rest of the changes in this fast-paced industry.