Data Center Networking Market Growth Forecast
The data center networking market is projected to grow to $103 billion by 2030, expanding at a compound annual growth rate of 17.6%. This growth is part of a broader trend that is expected to see the overall cloud infrastructure sector post double-digit growth through the end of the decade. The expansion is largely driven by the increasing demands of AI and cloud computing.
- Private equity has become a dominant force in data center M&A, accounting for 80-90% of the deal value since 2021. Notable recent transactions include the nearly $16 billion acquisition of AirTrunk by a Blackstone-led group and the $40 billion acquisition of Aligned Data Centers by a consortium including BlackRock and MGX. - Hyperscale cloud providers like Amazon, Google, Meta, and Microsoft are driving a significant portion of the demand, with their combined data center capital expenditures approaching $600 billion at the start of 2026. These four companies are expected to account for about half of the global data center capex by 2030. - Valuation multiples for data center assets remain elevated, with acquisition multiples for data center platforms ranging between 25x and 30x Enterprise Value to EBITDA in recent years. Some premium assets have traded as high as 46.2x EV/NTM EBITDA. - Key publicly traded companies in the data center networking space include Cisco, Arista Networks, and Juniper Networks. Together with Dell, HPE, and Huawei, the top players hold a significant share of the market. - Beyond general cloud adoption, other significant growth drivers include the rollout of 5G technology and the expansion of edge computing. The global edge computing market is projected to see a compound annual growth rate of 38.8%. - The market is experiencing a significant technology shift towards 400G and 800G optics, which is prompting enterprises to upgrade their switching fabrics more quickly. Software-defined networking (SDN) is also a key trend, offering greater automation and flexibility. - The massive capital requirements for expansion have led to strategic carve-outs. Telecommunications companies, for instance, are divesting their data center assets to unlock higher valuations and fund investments in 5G and fiber networks. - While the four largest U.S. hyperscalers are major players, there is also significant investment from "neo cloud service providers" and sovereign AI initiatives, which are also accelerating their data center deployments.
