The Future of Data Centers: From AI to Nuclear Power


Data center with AI neural network visible through doorway

Since the first data centers were built nearly eight decades ago, data centers have been continuously evolving. Changes have come rapidly in the technological world, making it difficult to predict what the market will look like in a decade or more. However, we can look at the near future and make solid predictions about trends that will shape the data center industry. Here are six trends to watch this year and in the future.

AI Informs Data Center Demand and Design

Artificial intelligence (AI) is taking on a more prominent role in business and daily life, especially with the introduction of generative AI applications like ChatGPT. Data centers are the powerhouses that make these applications possible. Along with an overarching shift toward digitization, advancements in AI have added to the booming demand for computing capacity.

The rise of AI is also influencing data center design in several ways, which tie into broader trends we’re seeing in the industry. For example, AI applications require high-density computing, which necessitates more powerful cooling solutions (more on this below). The future of data centers will continue to be shaped by AI technology.

Hotter IT Equipment Calls for Innovative Cooling Technologies

On the whole, power density in the data center is increasing, driven primarily by increased CPU thermal design power (TDP). Hotter IT equipment necessitates more intensive cooling solutions. Data centers are grappling with which cooling technologies offer the best capabilities while balancing other concerns like cost, scalability and sustainability.

Direct liquid cooling, such as immersion cooling, will likely become a more common approach. The initial cost may be prohibitive for some data centers, but hyperscalers with high densities are more likely to begin moving from air cooling technologies—or even direct-to-chip cooling—to liquid immersion. 

Learn more about comparing cooling technologies in The Complete Guide to Data Center Cooling.

The Emphasis on Edge Computing Continues

Edge computing has been increasing in prominence for a while now, and this trend is expected to continue. Many modern applications we depend on and technologies that will become more prevalent in the future—such as virtual reality streaming—rely on low-latency processing to function. A data center states away may not be able to deliver that minimal latency.

Bringing computing to the edge means distributing data centers across the country, ensuring there are data centers close to end users rather than keeping them clustered in traditional hubs. With the demand for distributed computing, data centers will continue to crop up in secondary markets throughout the country (and internationally).

Data Centers Take Steps to Achieve Sustainability Goals

The industry has been increasing its focus on sustainability, and data center owners and operators are setting increasingly lofty goals for reducing their carbon footprint and utilizing resources more sustainably. The future of data centers is greener than the data centers of yesterday.

This includes, for example, tracking water consumption and embracing innovative power solutions, like using integrated utilities microgrids, renewable energy sources and nuclear power. These changes are being phased in gradually. For example, the shift to nuclear power data centers isn’t likely to be an overnight change because current timeframes for small modular reactor (SMR) production and licensing stretch to 2028 and beyond.

Supply Chain Challenges Persist

The global supply chain was significantly disrupted by the COVID-19 pandemic, and the ripple effects have continued. These disruptions—coupled with rising demand for raw materials and data center components—have caused costs to rise and lead times to lengthen. 

New data center builds and upgrade projects are still affected by these supply chain challenges, which will continue to be an obstacle for the foreseeable future. The industry is adapting to these challenges, finding ways to meet demand while adhering to budgets and timelines. This involves careful planning, pre-purchasing components and pivoting when needed to avoid being held up by supplier delays.

Prefabricated Modular Solutions Continue to Gain Popularity

Supply chain challenges are one reason traditional construction is waning as modular construction gains more traction. The modular data center market has been expanding for some time, and it’s expected to reach $48.16 billion in 2026 at a compound annual growth rate (CAGR) of 17.1 percent.

Why have these solutions gained popularity? Modular construction offers real advantages over stick-built construction, and the industry has seen these advantages firsthand. Prefabricated data centers also come in a greater variety than ever before. Another factor driving this growth is the persistent need for private computing alongside a public cloud. Colocation facilities have limited space, and some companies prefer to keep their private computing on-site anyway. Modular data centers are an excellent option for enterprises that want to host their own data storage and computing in or outside their facility.

Keep Up With the Latest in Data Center Trends and News

Some important trends currently shaping the data center industry, like edge computing, AI and modular construction, will continue to accelerate in the coming years. We also expect to see innovations come into play to address challenges in areas such as cooling, sustainability and supply chain disruptions. 

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