Data Center Demand Forecasted to Grow 10% a Year Until 2030
A recent report by McKinsey predicts that the demand for data centers in the United States will grow by 10% annually throughout this decade. With the demand for computing at an all-time high, it's essential to understand the specifics behind this trend.
Data Center Functionality
Data centers are crucial for businesses as they store, distribute, and interpret data using various hardware and software tools. These tools assist IT departments in managing data and maintaining infrastructure. According to Grand View Research, the global data center market size was valued at $195 billion in 2022.
Apart from managing business needs, data centers are instrumental in running AI applications. They utilize high-performance computing (HPC) clusters, which are networks of multiple servers connected through high-speed networks. This setup allows for parallel processing and fast training times for AI models.
Biggest Players in the Space
In 2023, fDi Markets compiled a list of the top companies by foreign direct investment into data centers between 2003 to 2022. The top five players are:
Amazon | $38.6 billion
NTT | $15.1 billion
Cloudflare | $12.7 billion
Alphabet | $12.3 billion
Microsoft | $11.7 billion
Chips and Data Centers
Graphics processing units (GPUs) are specialized processors designed for parallel computations, particularly for graphics rendering. They are highly efficient for tasks that can be broken down into smaller calculations. GPU servers have gained popularity due to their exceptional performance in domains such as machine learning & AI, scientific simulations, and cryptocurrency mining.
On the other hand, central processing units (CPUs) are the general-purpose brains of a computer, responsible for executing instructions and performing calculations. CPU servers are commonly used for web hosting, database management, and content delivery networks (CDNs).
Final Considerations
As the demand for computing continues to grow, data centers are seeing larger investments each year. There are various ways to invest in data centers, from companies specializing in hardware like NVIDIA, which holds an 80% market share in the GPU space in 2023, to real estate operators providing the necessary facilities for data center operations.
Industry leaders like Amazon and others mentioned earlier are expanding their footprint in the data center space. As the need for computing power grows, these leaders are expected to have an advantage over the competition. Additionally, the real estate component is becoming increasingly important, as more facilities are needed to house data center operations. Operators that can provide the real estate for these data centers will find a burgeoning demand for their services.