Data center transformation market to hit USD61.1 billion by 2035

KUALA LUMPUR, 29 JULY 2026 —

The global data center transformation market is projected to triple from USD18.0 billion in 2025 to USD61.1 billion by 2035, growing 13.0% annually as enterprises replace legacy systems with AI-driven, hybrid-cloud infrastructure.

According to a SNS Insider report released Monday, the expansion reflects widespread adoption of hybrid cloud environments, AI-powered management tools, edge computing nodes and real-time analytics platforms. North America accounted for more than 40% of worldwide revenue in 2025, driven by mature cloud ecosystems and hyperscale expansions by Digital Realty, Equinix, Microsoft, Google Cloud, Amazon Web Services and Meta.

Hardware dominated the market in 2025, capturing the largest share after heavy spending on servers, storage arrays, high-efficiency cooling units and intelligent power distribution systems. Software is expected to grow fastest, expanding at a double-digit rate as companies install data-centre infrastructure management suites, AI-based monitoring dashboards and predictive-maintenance algorithms.

Consolidation services held the largest segment in 2025—roughly 36% of total revenue—because corporations merge multiple legacy data centres to cut maintenance budgets and simplify IT governance. Automation services are forecast to post the highest growth rate as operators deploy AI-driven robotic process automation, autonomous cooling controls and self-healing server clusters.

The IT and telecom vertical captured the biggest slice of the market in 2025—about 36%—reflecting continued investment in hyperscale data centres, 5G core networks and cloud interconnect fabrics. Healthcare is projected to see the strongest CAGR through 2035 as hospitals adopt AI diagnostics, telemedicine portals and digital imaging networks that require low-latency edge compute.

Tier-3 facilities represented the largest installed base in 2025 (38.4%) because they offer a balance of uptime, scalability and operational cost. Tier-4 sites will expand fastest—growing 15.2% annually—to meet the reliability demands of AI training workloads, high-frequency trading and continuous-operation finance systems.

North America led the world in 2025 with more than 40% of global revenue, valued at approximately USD6.3 billion and projected to reach USD21.1 billion by 2035 (CAGR 12.8%). Europe ranked second, valued at about USD5.0 billion in 2025 and on track to reach USD16.1 billion by 2035 (CAGR 12.3%), under pressure from GDPR compliance requirements and corporate sustainability mandates.

Asia-Pacific is set to post the fastest regional growth—14.6% CAGR—powered by rapid digitalisation, surging internet penetration and heavy spending on hyperscale cloud nodes and edge AI accelerators.

In 2025 Equinix expanded its global hyperscale footprint by adding new colocation halls in major metros to meet surging interconnection demand from financial-services and e-commerce clients. NTT simultaneously advanced its Asia-Pacific modernisation programme, commissioning energy-efficient hyperscale halls across key markets to support regional cloud roll-outs.

Malaysia sits at the regional hub for this expansion. Equinix lists Cyberjaya as one of its ASEAN landing pads, while NTT operates a Tier-4 facility in Iskandar Puteri supplying low-latency services to Singapore and southern Thailand. The report did not provide a Malaysia-specific revenue projection.

Related: Microsoft