IMARC Group Forecasts 8.86% CAGR for Europe Data Center Market Amidst AI and Cloud Adoption Surge

The Europe data center market is experiencing a critical phase of infrastructure evolution, having reached a valuation of USD 58.77 Billion in 2025. Propelled by the accelerating digitalization of the region's economy and sovereign cloud ambitions, the market is projected to reach USD 126.17 Billion by 2034. This growth trajectory represents a solid Compound Annual Growth Rate (CAGR) of 8.86% during the forecast period of 2026-2034.

Key Market Trends & Highlights (2026-2034)

• Market Size & Growth: The Europe data center market was valued at USD 58.77 Billion in 2025 and is projected to reach USD 126.17 Billion by 2034, exhibiting a stable CAGR of 8.86%.
• Key Drivers: The market is primarily driven by the rapid adoption of cloud computing and Artificial Intelligence (AI), alongside the proliferation of IoT devices and the rollout of 5G networks which require low-latency data processing.
• Dominant Segments:
• Type: Hyperscale data centers hold the largest market share, fueled by the massive infrastructure needs of global cloud providers.
• Component: The Solution segment (IT infrastructure, power, cooling) dominates over services.
• End User: The IT and Telecom sector is the largest end-user, accounting for the bulk of data center demand.
• Key Regions: Germany currently holds the majority market share, serving as the region's central connectivity hub. Other key markets include the United Kingdom, France, Italy, Russia, Spain, and the Netherlands.
• Sustainability & Regulation: Strict data protection laws (GDPR) are enforcing data sovereignty, pushing for local data storage. Simultaneously, there is a rising trend toward "Green Data Centers" focused on energy efficiency and renewable power sources to meet environmental standards.
• Key Players: The market is led by major infrastructure providers including Equinix Inc., Digital Realty Trust Inc., NTT Ltd., Global Switch Holdings Limited, and Telehouse (KDDI Corporation).

Challenges the Industry Must Address

Despite the strong growth outlook, key challenges remain:

• Grid Congestion: Power availability constraints in Tier-I markets like Frankfurt and Amsterdam are limiting new builds and delaying energization.
• Land Scarcity: The lack of suitable land in primary FLAP-D hubs is driving up costs and forcing development into secondary markets.
• Sustainability Pressures: Strict regulations regarding carbon neutrality and energy efficiency require operators to balance immediate deployment needs with long-term environmental commitments.
The urgency of this expansion is highlighted by the explosive demand for artificial intelligence capabilities; notably, AI-focused data center colocation signings in Europe reached 414 MW in the first nine months of 2025 alone, up from 133 MW a year earlier. This surge is compelling operators to rapidly deploy high-density infrastructure capable of supporting next-generation computational workloads across the continent.

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What is Driving Europe Data Center Market's Boom?

The report identifies three core forces reshaping Europe's data center landscape:

• AI and Hyperscale Proliferation: The exponential rise in AI workloads is a primary driver, evidenced by major commitments such as Brookfield Infrastructure and Data4's USD 20.7 billion investment plan announced in February 2025 to develop AI infrastructure in France.
• Sovereignty and Regulation: Stringent data protection frameworks like GDPR are mandating local data processing and storage, pushing cloud providers to establish regional presence to ensure compliance and technological sovereignty.
• Sustainability and District Heating: Environmental imperatives are transforming operations, with innovative projects like atNorth's 2025 agreement to capture waste heat from its Danish facility to supply district heating to over 8,000 homes.

Key Market Insights at a Glance

The following highlights the leading segments by category based on 2025 market share data:

• Component - Solution: 64% market share, driven by integrated infrastructure needs spanning servers, storage, and networking for AI support.
• Type - Hyperscale: 41% market share, owing to large cloud investments enabling massive data processing and economies of scale.
• Enterprise Size - Large Enterprises: 70% market share, leveraging capital to deploy mission-critical infrastructure demanding security and compliance.
• End User - IT and Telecom: 35% market share, reflecting fundamental dependencies for network services, cloud platforms, and content delivery.
• Country - Germany: Serving as a central hub for connectivity and hyperscale development in the region.

Detailed Segment Analysis

1. By Component: Solution Dominates with 64% Share

The Solution segment commands the majority of the market, serving as the foundational layer for Europe's digital infrastructure. This dominance is driven by the critical need for robust hardware and integrated systems-including servers, cooling units, and power systems-that ensure reliability and efficiency.
The demand is further amplified by the retrofit of existing facilities to accommodate high-density AI racks. As operators upgrade legacy infrastructure to improve Power Usage Effectiveness (PUE), the procurement of advanced infrastructure solutions continues to outpace the services segment.

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2. By Type: Hyperscale Leads at 41%

Hyperscale facilities lead the market type, underpinned by the aggressive expansion strategies of global cloud giants like Microsoft, Google, and AWS. These massive facilities are essential for supporting the region's cloud computing needs and the training of large language models (LLMs).
Recent activity confirms this trend, with Microsoft announcing a USD 4.8 billion investment in October 2024 to enhance AI and cloud infrastructure in Northern Italy, reinforcing the pivotal role of hyperscale builds in the European ecosystem.

3. By Enterprise Size: Large Enterprises Command 70% Share

Large enterprises account for the bulk of the market share, driven by their substantial requirements for secure, compliant, and always-on infrastructure. These organizations are increasingly adopting hybrid cloud strategies, necessitating a mix of on-premise data centers and colocation services.

The segment is also fueled by the financial sector and industrial giants digitizing their operations. The need for disaster recovery capabilities and low-latency access to data across multiple European jurisdictions keeps large enterprise spending at the forefront of market growth.

4. By End User: IT and Telecom Leads with 35% Share

The IT and Telecom sector remains the largest end-user, propelled by the continuous rollout of 5G networks and the expansion of fiber-optic backhauls.

• IT & Telecom (35% - Largest): Driven by the need for carrier-neutral facilities and edge nodes to support real-time communication.
• BFSI (High Growth): Advancing with a projected strong CAGR as financial institutions modernize legacy systems.
• Government: Increasing investment in sovereign clouds to protect citizen data.6
• Energy & Utilities: Leveraging data centers for smart grid management.

Technology Is Redefining Data Center Operations

Technological innovation is central to the market's evolution, particularly in the realm of power and cooling. The density of AI workloads is rendering traditional air cooling insufficient, accelerating the adoption of liquid cooling technologies. Operators are increasingly integrating these advanced thermal management systems to handle the heat generated by GPU-intensive tasks.

Furthermore, the convergence of 5G and edge computing is decentralizing the landscape. For instance, Vodafone Germany's inauguration of a nationwide 5G Standalone network in October 2024 is spurring the development of edge data centers. These smaller, localized facilities are critical for reducing latency for IoT applications and autonomous systems, moving data processing closer to the user.

Key Players Shaping the Europe Data Center Market

The market exhibits sophisticated dynamics with multinational providers competing alongside regional specialists, including:

• Equinix Inc.
• Digital Realty Trust Inc.
• NTT Ltd.
• Telehouse (KDDI Corporation)
• Global Switch Holdings Limited
• Vantage Data Centers
• CyrusOne Inc.
• Amazon Web Services (AWS)
• Microsoft Corporation
• Google LLC

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About IMARC Group

IMARC Group is a leading global market research company providing data-driven insights and expert consulting services to businesses seeking to achieve their strategic objectives. With a multi-disciplinary team of industry experts, IMARC delivers thorough, reliable market intelligence across sectors including Technology, Telecommunications, Construction, and Energy.

This release was published on openPR.