Data Center Liquid Cooling Market to Witness 28.7% CAGR Driven by AI Adoption, Investments and Sustainability Targets

Rapid AI expansion and substantial hyperscale investments are accelerating adoption of direct-to-chip and immersion cooling technologies

Ney York, NY, Feb. 17, 2026 (GLOBE NEWSWIRE) -- The data center liquid cooling market is projected to expand from USD 6.6 billion in 2026 to USD 38.4 billion by 2033, registering a CAGR of 28.7% between the same period. Rapid growth is fueled by significant demand surge for AI, high-performance computing, and hyperscale data center expansion, where traditional air-cooling systems unable to manage escalating rack densities. Direct-to-chip and immersion cooling technologies are becoming mainstream as energy efficiency and sustainability targets intensify. Significant investments planned by prominent end users like Google, Meta, Microsoft, Amazon and others such as, recent planned investments of 650 billion dollars on the AI marketspace to bolster the data center liquid cooling market to a substantial extent.

Further, with AI training clusters exceeding 30–50 kW per rack and next-generation GPUs pushing thermal thresholds, liquid cooling has moved from niche deployment to strategic necessity. As chipmakers like NVIDIA and AMD release processors with thermal design power exceeding 700W, data center operators are retrofitting existing infrastructure or are building greenfield liquid-first facilities. Operators are prioritizing power usage effectiveness reduction and carbon footprint optimization. Regulatory pressure around energy efficiency and water consumption further supports advanced cooling adoption. Liquid cooling underpins the scalability of cloud infrastructure, edge computing and enterprise digital transformation.

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Key Takeaways from Data Center Liquid Cooling Market

• Direct-to-chip is a key revenue contributor in data center liquid cooling market due to easier integration into existing rack.
• Immersion cooling is projected to be the fastest-growing segment, driven by its superior heat rejection for hyperscale AI factories.
• North America is the primary investment hotspot, hosting the world's largest concentration of AI training clusters.
• Competition is increasing due to strategic alliances between chipmakers (Silicon) and cooling providers (Infrastructure).
• Rapid adoption of Rear Door Heat Exchangers as a bridge technology for hybrid cooling environments being witnessed in the market.
• Rising demand for Dielectric Fluids (bio-synthetic and sustainable variants) is creating high-margin opportunities for chemical suppliers replacing PFAS.

Market Dynamics Shaping the Data Center Liquid Cooling Market

AI and high-density computing expansion propelling data center liquid cooling market

Substantial growth of AI workloads and generative models is increasing rack power densities in which traditional air-cooling systems reached performance limits, especially in hyperscale and colocation facilities. Liquid cooling offers superior thermal transfer efficiency, enabling stable performance for GPUs and accelerators operating under extreme loads. Cloud service providers and enterprises deploying AI clusters require scalable and energy-efficient infrastructure. As compute intensity rises, liquid cooling becomes foundational to maintaining uptime, optimizing performance, and meeting environmental sustainability commitments boosting data center liquid cooling market.

Modular and retrofit liquid cooling solutions creating lucrative opportunities for the data center liquid cooling market

Retrofit-friendly and modular cooling systems designed for existing data center infrastructure is expected to create ample opportunities for the key players. Operators are seeking hybrid cooling approaches that combine air and liquid systems without full facility redesign. Immersion tanks and rear-door heat exchangers provide incremental deployment flexibility in data center liquid cooling market. Vendors offering plug-and-play solutions with integrated monitoring software can capture significant market share. Furthermore, integration with renewable-powered data centres and waste-heat reuse systems creates new monetization pathways, especially in regions promoting energy circularity.

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High initial capital expenditure impacting data center liquid cooling market growth

Upfront costs for liquid cooling infrastructure remain substantial in data center liquid cooling market. Facility redesign, plumbing integration and specialized containment systems increase deployment complexity. Smaller data center operators are delaying adoption due to budget constraints. Concerns around coolant compatibility, leak management as well as maintenance training further slow decision-making. Addressing cost barriers and simplifying integration processes to be critical for accelerating mainstream adoption beyond hyperscale environments.

Data Center Liquid Cooling Market Segmentation

By Cooling Fluid Type

• Water-Glycol Based Cooling
• Dielectric Fluids
• Synthetic Hydrocarbon Fluids
  

Water-based coolants anticipated to remain prominent in data center liquid cooling market due to high thermal conductivity and cost efficiency. Dielectric fluids are gaining traction in immersion cooling deployments, as they eliminate electrical conductivity risks. Environmental and safety considerations influence fluid selection. Dielectric fluids are projected to grow fastest as immersion cooling adoption accelerates across AI clusters. Synthetic and mineral oils serve niche applications requiring enhanced stability.

By Product Type

• Cold Plates
• Pumps & Pump Modules
• Heat Exchangers
• Chillers
• Cooling Distribution Units
• Immersion Cooling
• Others
  

Cold plates, cooling distribution units, rear-door heat exchangers, and immersion cooling tanks define the product ecosystem. Cold plates accounts for a key share in data center liquid cooling market due to direct-to-chip dominance in hyperscale facilities. Cooling distribution units are essential for managing coolant flow and temperature control. Immersion tanks are experiencing the fastest growth, driven by ultra-high-density deployments.

By Data Centre Type

• Hyperscale Data Centres
• Colocation Data Centres
• Enterprise Data Centres
• Edge Data Centres
• High Performance Computing (HPC) Centres
• Modular Data Centres

Deployment strategies vary based on workload intensity and facility design constraints. Hyperscale data centers account for a prominent market share due to AI and cloud expansion. Colocation facilities are increasingly integrating hybrid cooling solutions to attract enterprise AI clients in the coming years. Enterprise data centers are gradually adopting liquid systems for HPC applications and edge data centers represent an emerging segment requiring compact, efficient cooling modules in data center liquid cooling market.

By Cooling Technique

• Direct-to-Chip Liquid Cooling
• Single-Phase Immersion Cooling
• Two-Phase Immersion Cooling
• Rear-Door Heat Exchanger Cooling
• Indirect Liquid Cooling
• Hybrid Air-Liquid Cooling
• Others
  

Direct-to-chip cooling is expected to be leading in current adoption due to compatibility with existing server designs. Immersion cooling is the fastest-growing technique, offering superior thermal performance and density optimization. Rear-door heat exchangers provide transitional solutions in hybrid systems, whereas, two-phase immersion is emerging in specialized HPC environments. Technique selection depends on rack density, scalability needs and long-term operational efficiency goals in data center liquid cooling market.

By End User

• Cloud Service Providers
• Hyperscalers
• Colocation Providers
• Telecom Operators
• Large Enterprises
• Government & Defense Agencies
• Others
  

Cloud service providers are the prominent end-user group in the global market, driven by AI training workloads. Large enterprises in finance and healthcare are expanding HPC deployments and is expected to witness a significant growth over the forecast period. Colocation operators are investing to support AI-ready infrastructure. Research institutions and government HPC facilities contribute steady demand. End-user purchasing decisions increasingly factor sustainability and long-term energy savings.

By Industry Vertical

• IT and Telecom
• BFSI
• Healthcare & Pharmaceuticals
• Media & Entertainment
• Automotive
• Aerospace & Defense
• Energy & Utilities
• Manufacturing & Industrial IoT
• Others
  

IT & telecom remains the prominent industry vertical in data center liquid cooling market due to hyperscale expansion. Banking and financial services are adopting liquid cooling for latency-sensitive trading platforms. Healthcare and life sciences leverage HPC for genomic research and media & entertainment supports rendering and AI content creation workloads. Manufacturing sectors are exploring AI-driven automation and are expected to create demand in the coming years.

By Region

• North America
• Europe
• Asia Pacific
• South America
• MEA
  

North America accounts for the majority of share in data center liquid cooling market owing to deployments of large-scale AI data centres in the United States. Aggressive infrastructure build-out of hyperscalers (Amazon, Google, Microsoft, Meta) who are pioneering liquid-native designs. The U.S. is the epicentre of the AI hardware boom, necessitating immediate cooling upgrades.

Asia-Pacific is witnessing rapid expansion in China and Singapore, supported by cloud infrastructure growth. Further heavy investments in high-density compute zones to support national digital sovereignty initiatives is bolstering the demand. Europe, guided by strict environmental directives like the EU Green Deal, is focusing heavily on heat recovery using waste heat from liquid-cooled data centers to warm district heating networks, creating a circular energy market driver.

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Competitive Landscape – Data Center Liquid Cooling Market

Partnerships between cooling solution providers, chip manufacturers, and hyperscale operators is being witnessed in data center liquid cooling market. Companies are investing in expansions through vertically integrated product portfolios, combining hardware, coolant technologies and intelligent monitoring software. Leading players like Vertiv, Schneider Electric, and nVent are aggressively acquiring smaller liquid cooling startups to complete their portfolios. Standardization efforts and co-development agreements with server OEMs are shaping the next phase of scalable, AI-ready cooling infrastructure. further prevailing strategy is chip-to-chiller integration, vendors are no longer just selling pumps or tanks, they are partnering directly with chip manufacturers like NVIDIA and Intel to offer pre-certified reference designs.

Key Players in Data Center Liquid Cooling Market are

• Asetek Inc. A/S
• CoolIT Systems
• Submer
• Asperitas
• Iceotope
• LiquidStack
• Green Revolution Cooling Inc.
• Schneider Electric
• Vertiv Group Corp.
• Rittal GmbH & Co. KG
• STULZ GMBH
• Eaton
• Hewlett Packard Enterprise
• Alfa Laval
• Lenovo
• DCX Liquid Cooling Systems
• Huawei
• Fujitsu
• Delta Electronics
• Airedale / Modine

Key Developments:

• In December 2024, Blackstone acquired AirTrunk in a USD 16 billion transaction, signaling strong private equity confidence in liquid-ready, high-density data center infrastructure as a strategic asset class.
• In March 2024, Vertiv was selected as a primary partner for NVIDIA’s GB200 NVL72 systems, collaborating on advanced cooling loop engineering to maintain thermal stability across optics and copper interconnects.
• In December 2024, CoolIT Systems expanded its manufacturing capacity to address accelerating demand from customers deploying AI-intensive computing environments.
• In November 2025, Daikin announced the acquisition of Chilldyne, a specialist in negative-pressure liquid cooling technologies designed for high-performance and AI-driven data centers.

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