When we think of game-changing tech, our minds jump to AI, quantum computing, or maybe EVs. But one critical enabler often flies under the radar: data center cooling. As the world becomes increasingly digital, the demand for fast, powerful computing is rising—and so is the heat it generates.
According to BIS Research, the data center cooling market is projected to reach $100.12 billion by 2035 from $25.77 billion in 2024, growing at a CAGR of 12.55% during the forecast period 2025-2035. This is driven by surging data workloads, energy efficiency mandates, and the rise of high-performance AI computing.
From Blowers to Baths: The Cooling Tech Evolution
To handle this heat surge, cooling technologies have had to evolve fast. Traditional air-based CRAC units (Computer Room Air Conditioners) are still used in many facilities, but newer systems now focus on proximity—known as close-coupled cooling. These setups reduce energy waste by targeting hot zones directly at the source.
But that’s just the beginning. Liquid cooling is stepping into the mainstream, as it offers better thermal performance and a smaller footprint. Nearly 19% of data centers have adopted liquid cooling, with 36% planning to do so soon (Omdia, 2024), and the liquid cooling market is projected to grow from $3.9 billion in 2024 to over $22 billion by 2034 (BIS Research, 2025).
Then there’s immersion cooling—where servers are submerged in non-conductive liquid. Though still a niche solution, it’s gaining attention for its ability to reduce energy use by up to 50%.
Why the Heat Is Rising: AI and Efficiency Pressures
So, what’s really fueling this cooling revolution? First and foremost: AI. Training large models like GPT-4 or Gemini requires immense processing power—leading to heat loads exceeding 400W per rack, pushing traditional air cooling beyond its limits (Data Center Frontier, 2024).
Secondly, energy use is under the microscope. Cooling accounts for 30–40% of total data center energy usage. With net-zero commitments growing, reducing PUE (Power Usage Effectiveness) is no longer optional—it’s strategic (International Energy Agency, 2023).
Finally, location and regulation matters. Europe’s water-use restrictions are driving the adoption of low-water cooling systems. Meanwhile, U.S. tariffs on Chinese cooling components have complicated imports and delayed builds in 2025.
Innovation is Booming: What’s New in 2025?
This urgency has triggered an innovation race. In a major move, Samsung acquired FlaktGroup for €1.5 billion in early 2025 to expand its HVAC and data center solutions.
Dell Technologies rolled out a new rear-door heat exchanger (eRDHx) at Dell World 2025 that captures up to 100% of server heat, reducing cooling energy usage by nearly 60% and operating with just warm water.
Then there’s GridFree AI, a U.S.-based startup that builds off-grid data centers with integrated cooling powered by renewables. Their modular design claims 90% power conversion efficiency, redefining sustainability at scale.
Meanwhile, Google, Microsoft, and Meta are integrating 400VDC power and liquid cooling, adapting EV-style thermal management for next-gen racks.
Zooming Out: How Regions Are Reacting
Zooming out, we see distinct regional trends. North America leads in liquid cooling adoption with about 37% of the global share (BIS Research, 2025). The U.S., home to hyperscalers like AWS and Google Cloud, continues to pilot hybrid cooling architectures.
In Asia-Pacific, rapid cloud adoption and supportive energy policies are making it the fastest-growing region. Countries like India and Singapore are investing in liquid and hybrid cooling technologies to boost sustainability.
Europe, meanwhile, is leaning into creative solutions. In water-scarce regions like Spain and Australia, data centers are experimenting with toilet-water and greywater cooling systems to meet efficiency and environmental mandates.
Enter the AI Brain: Smart Cooling Systems Are Here
Ironically, AI isn’t just causing more heat—it’s also solving it. Several data centers now deploy reinforcement learning (RL) algorithms to manage airflow, humidity, and cooling systems. Google’s DeepMind once reported 40% energy savings using AI to control its data center cooling.
Other facilities are testing multi-agent AI systems that coordinate energy use across entire buildings—optimizing not only temperature but carbon emissions and cost. These systems show 14–21% efficiency gains, especially in hybrid-cooled setups.
Challenges Still Linger
Despite all this momentum, several hurdles remain. Retrofitting older facilities for liquid or immersion systems is complex and expensive. Water access is increasingly restricted in many regions. And shifting tariffs on essential imports—from copper coils to thermal transfer fluids—are affecting timelines and budgets.
Plus, AI’s compute hunger is only growing. Next-gen chips will demand even more sophisticated thermal strategies, requiring a blend of liquid cooling, AI management, and new design paradigms.
The Big Picture
What was once a back-end utility is now a core enabler of digital progress. Data center cooling isn’t just about fans and fluids anymore—it’s the foundation for powering AI, meeting net-zero goals, and keeping the digital economy running 24/7.
From Samsung’s HVAC ambitions to AI-optimized airflow, from immersion tanks to off-grid power foundries—the data center cooling market is officially in its golden era.
And the best part? The coolest innovations are still to come.
About the Publisher: BIS Research is a global market intelligence, research and advisory company that focuses on emerging technology trends that are likely to disrupt the market. Its team includes industry veterans, experts, and analysts with diverse backgrounds in consulting, investment banking, government, and academia.
Sources
BIS Research – Data Center Cooling Market Report (2025)
Omdia – Data Center Liquid Cooling Trends (2024)
TechCrunch – Immersion Cooling Startups and GridFree AI Innovation (2023–2025)
Data Center Frontier – AI Driving Liquid Cooling Adoption (2024)
Dell Technologies – Rear-Door Heat Exchanger Launch (2025)
Google DeepMind – Data Center Energy Optimization Using AI (2023)
Reuters – U.S.-China Tech Tariffs and Their Impact on Cooling Supply Chains (2025)
