The data center market grew rapidly in 2025 as innovative technologies emerged and user expectations evolved. We expect this demand to continue increasing in 2026, and factors including energy constraints, artificial intelligence (AI) and automation technologies, and sustainability will each play a role in shaping priorities in the data center industry.
Trends Observed in 2025
- AI and automation: It is no secret that AI has impacted most industries in some way, and the data center industry is no exception. Increased use and popularity of large language models and generative AI have led to larger demand for data center capacity that is equipped and ready to handle these AI technologies, including higher performance computing using graphic processing units (GPUs) over traditional central processing units (CPUs). AI and machine learning have allowed for automation of data center activities such as performance monitoring, threat identification, and resource management.
- Cloud and infrastructure optimization: Businesses have revisited their cloud infrastructures and processes to maximize optimization and efficiency, eliminate redundancies, and modernize existing services and components. Some organizations are implementing hybrid cloud frameworks to obtain both the customization and familiarity offered by on-premises environments, in addition to scalability and innovation opportunities gained through cloud computing. TierPoint’s 2025 Technology and IT Modernization Report found that 38% of businesses plan to adopt or invest in a hybrid cloud model within the next two years.
- Security and compliance developments: Both physical security and cybersecurity remain a priority for data center providers, operators, and customers. In 2025, we saw security innovations such as AI-powered surveillance, drone monitoring, smart fence systems, advanced encryption, and zero-trust architecture. We expect security innovations to continue evolving in 2026 as cyber threats continue to become more sophisticated. Additionally, governments and regulatory agencies continue to enforce and amend data privacy regulations in response to consumer concerns, particularly with respect to personal data. In order to earn customers’ trust and maintain regulatory compliance, data center providers will have to prioritize data protection and commitment to compliance in 2026, including maintaining applicable certifications (e.g., SOC 2, ISO 27001).
Growth and Challenges in 2026: Energy Consumption, Sustainability, and Talent
In 2025, we observed a shift in the role data centers play for many organizations. Beyond storing data and business workflow information, data centers are now a central component of IT infrastructure strategy with enhanced security that drives digital transformation for many businesses. The global data center market size is expected to reach an annual growth rate of over 11% by 2034, with North America currently holding the largest market share. The International Energy Agency predicts that global data center power consumption could reach up to 1,050 terawatt-hours by 2026, largely attributable to increasing demand of AI workloads and the use of GPUs (which consume more energy resources than traditional CPUs).
While some solutions have evolved to help mitigate the effects of higher energy consumption and keep up with rising power demands, such as installing cooling systems to offset the heat generated by GPUs, the industry will have to continue to innovate and evolve as data center demand increases. The industry is also facing a talent shortage of professionals with specialized knowledge of engineering, mechanics, energy construction, and infrastructure AI. Organizations that can attract and retain these specific talents will gain a competitive advantage in 2026.
Therefore, we can expect to see additional focus on sustainability and responsibility in connection with building data centers, as providers are incentivized to keep processes as efficient as possible while minimizing impact on the environment. This may include integrating renewable energy sources such as solar and wind power, which businesses should consider when negotiating for and building data centers.
How We Can Help
Our technology, outsourcing, and commercial contracts team has been at the forefront of data center-related contracting and can help businesses navigate their unique data center-related concerns and challenges.