Direct Liquid Cooling Surges 156 Percent Y/Y, Becoming The De Facto Standard for AI Clusters
REDWOOD CITY, Calif., Sept. 10, 2025 /PRNewswire/ — According to a new report by Dell’Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, the worldwide Data Center Physical Infrastructure (DCPI) market sustained its momentum in 2Q 2025, growing 18 percent year-over-year to $8.9 billion in manufacturer revenue. This marks the third consecutive quarter of high-teens growth, underscoring the durable demand created by the ongoing AI buildout.
“Hyperscalers and colocation providers are scaling capacity at an unprecedented pace, and direct liquid cooling has consolidated as the technology of choice, moving quickly from early adoption to mainstream design,” said Alex Cordovil, Research Director at Dell’Oro Group. “This is creating a structural uplift across power and cooling architectures that will shape the data center landscape for years to come. With AI viewed as existential to competitiveness, we expect data center infrastructure growth to remain exceptionally strong through 2026.”
Additional highlights from the 2Q 2025 Data Center Physical Infrastructure Quarterly Report:
- Thermal Management expanded 29 percent Y/Y, with Direct Liquid Cooling surging 156 percent Y/Y as it emerges as the de facto standard for large AI clusters.
- Power distribution markets grew 26 percent Y/Y, driven by the rapid adoption of overhead busways and intelligent rack PDUs to support higher-density racks.
- UPS revenue rose 13 percent Y/Y to $3.3 billion, with demand strongest in large three-phase systems of 251 kVA and above.
- North America led with 23 percent Y/Y growth as record-breaking gigawatt-scale campus announcements accelerated, while EMEA and Asia Pacific trailed but are expected to pick up momentum.
- Hyperscalers and colocation providers accounted for more than 80 percent of expansion, underscoring their central role in fueling the AI supercycle.
- Vendors across the spectrum benefitted from the AI surge, from large infrastructure powerhouses like Vertiv to specialized cooling players such as Munters.
Dell’Oro Group’s Data Center Physical Infrastructure quarterly report provides a complete overview of the Data Center Physical Infrastructure market. This covers market sizes and forecasts for uninterruptible power supplies (UPS), thermal management, cabinet power distribution and busway, rack power distribution, IT racks and containment, and software and services. Allocation of manufacturing revenues by cloud service providers, telco, colocation, and enterprise customer segments is also provided. The report also shares insights into market trends, future outlook, and competitive landscape. For more information about the report, please contact us at [email protected].
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks, and data center infrastructure markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.
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SOURCE Dell’Oro Group
