AI Adoption to Drive 28.7% CAGR in Data Center Cooling

Published February 17, 2026 by The Daily Scout

The market for data center liquid cooling is projected to grow at a compound annual growth rate of 28.7%. A new report attributes this growth to the escalating thermal loads from GPUs used in AI, sustainability mandates, and a broader industry transition toward liquid-first data center designs.

Why it matters

- The aark a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a- Cooling systems represent up to 40% of a data center's total energy consumption, a figure that is driving the shift to more efficient liquid cooling methods. Liquid cooling can reduce a data center's total power consumption by over 10% compared to traditional air cooling. - Next-generation GPUs from companies like NVIDIA are expected to consume over 1,500 watts per chip by 2026, a significant increase from the 700-watt consumption of current high-end models like the H100. This rising power density makes traditional air cooling, which is generally ineffective above 30-40 kW per rack, obsolete for high-performance AI clusters. - The market is led by companies like Vertiv, Schneider Electric, and CoolIT Systems, who provide a range of solutions including direct-to-chip and immersion cooling systems. Direct-to-chip solutions are currently the most widely adopted, accounting for a major share of liquid cooling investments in 2024. - Implementing liquid cooling comes with significant upfront costs, with direct-to-chip servers costing 20-30% more than their air-cooled counterparts. Retrofitting a medium-sized data center for liquid cooling can range from $100,000 to $500,000 for infrastructure upgrades alone. - Liquid cooling offers substantial improvements in Power Usage Effectiveness (PUE), a key metric for data center efficiency. While traditional air-cooled data centers have an average PUE of 1.5 to 2.0, facilities with liquid cooling can achieve a PUE below 1.2. - Hyperscale data centers, operated by companies like Amazon, Google, and Microsoft, are the largest and fastest-growing segment for liquid cooling adoption due to their massive AI infrastructure investments. These large operators accounted for the majority of liquid cooling investments in 2024. - Beyond energy savings, liquid cooling significantly reduces water consumption. Closed-loop liquid cooling systems use less than 0.03 gallons of water per kilowatt-hour, a fraction of the 0.5 gallons or more consumed by evaporative cooling systems common in air-cooled facilities. - North America, particularly the U.S., holds the largest market share for data center liquid cooling, driven by the concentration of hyperscale data centers and AI hardware development. The Asia-Pacific region is expected to be the fastest-growing market.

Key numbers

The market for data center liquid cooling is projected to grow at a compound annual growth rate of 28.7%.
Liquid cooling can reduce a data center's total power consumption by over 10% compared to traditional air cooling.
Next-generation GPUs from companies like NVIDIA are expected to consume over 1,500 watts per chip by 2026, a significant increase from the 700-watt consumption of current high-end models like the H100.
This rising power density makes traditional air cooling, which is generally ineffective above 30-40 kW per rack, obsolete for high-performance AI clusters.

What happens next

Next-generation GPUs from companies like NVIDIA are expected to consume over 1,500 watts per chip by 2026, a significant increase from the 700-watt consumption of current high-end models like the H100.
The Asia-Pacific region is expected to be the fastest-growing market.

Sources

Quick answers

What happened in AI Adoption to Drive 28.7% CAGR in Data Center Cooling?

Why does AI Adoption to Drive 28.7% CAGR in Data Center Cooling matter?

The aark a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a- Cooling systems represent up to 40% of a data center's total energy consumption, a figure that is driving the shift to more efficient liquid cooling methods. Liquid cooling can reduce a data center's total power consumption by over 10% compared to traditional air cooling. Next-generation GPUs from companies like NVIDIA are expected to consume over 1,500 watts per chip by 2026, a significant increase from the 700-watt consumption of current high-end models like the H100. This rising power density makes traditional air cooling, which is generally ineffective above 30-40 kW per rack, obsolete for high-performance AI clusters. The market is led by companies like Vertiv, Schneider Electric, and CoolIT Systems, who provide a range of solutions including direct-to-chip and immersion cooling systems. Direct-to-chip solutions are currently the most widely adopted, accounting for a major share of liquid cooling investments in 2024. Implementing liquid cooling comes with significant upfront costs, with direct-to-chip servers costing 20-30% more than their air-cooled counterparts. Retrofitting a medium-sized data center for liquid cooling can range from $100,000 to $500,000 for infrastructure upgrades alone. Liquid cooling offers substantial improvements in Power Usage Effectiveness (PUE), a key metric for data center efficiency. While traditional air-cooled data centers have an average PUE of 1.5 to 2.0, facilities with liquid cooling can achieve a PUE below 1.2. Hyperscale data centers, operated by companies like Amazon, Google, and Microsoft, are the largest and fastest-growing segment for liquid cooling adoption due to their massive AI infrastructure investments. These large operators accounted for the majority of liquid cooling investments in 2024. Beyond energy savings, liquid cooling significantly reduces water consumption. Closed-loop liquid cooling systems use less than 0.03 gallons of water per kilowatt-hour, a fraction of the 0.5 gallons or more consumed by evaporative cooling systems common in air-cooled facilities. North America, particularly the U.S., holds the largest market share for data center liquid cooling, driven by the concentration of hyperscale data centers and AI hardware development. The Asia-Pacific region is expected to be the fastest-growing market.