Five Data Center Trends That Could Upend the Cloud Infrastructure Playbook over the Next Decade

Key Insights:

• The next decade of data center growth will not follow the old cloud playbook. New operator models, shifting regional priorities, and rising AI demand are changing where capacity gets built and who captures value.
• Neoclouds stand out as the fastest-growing operator type because they are built around specialized AI compute, flexible service models, and less customer lock-in than traditional cloud platforms.
• AI will become the dominant data center workload by the early 2030s, but legacy workloads will still matter. Operators need infrastructure strategies that support both high-density AI processing and the ongoing needs of conventional applications.
• Europe’s hyperscale market is moving toward fewer but more powerful sites, while sovereign cloud investment is opening new regional opportunities, with South Korea emerging as an outsized player relative to its size.
• Orbital data centers remain early stage, but they reflect how seriously the industry is starting to think about energy limits, land constraints, and alternative compute models beyond Earth-based infrastructure.

Over the past year, interest in the data center market has accelerated immensely as organizations race to expand cloud infrastructure and support increasingly Artificial Intelligence (AI)-driven workloads. In response to this growing demand, ABI Research has launched its new Data Centers Research Service (formerly known as Cloud). The service explores the trends shaping scalable and sustainable data center expansion, the technologies enabling next-generation facilities, and the companies driving innovation across the ecosystem.

Our whitepaper, Winning the Next Wave of Data Center Growth, explores the strategic priorities shaping business decisions around expansion, investment, real estate, and policy. Here are five key trends from the report that reveal where the data center industry is headed next.

1. Neoclouds Will Be the Fastest-Growing Data Center Operator Type

According to ABI Research, the global neocloud data center site count will increase from 696 in 2026 to 2,247 by 2035. This 13.9% Compound Annual Growth Rate (CAGR) is an anomaly compared to the 0% to 3.8% CAGRs for hyperscale, government/sovereign, colocation, and captive data center categories.

Key drivers behind the neocloud market ascendance include demand for the following:

• Specialized AI compute solutions
• Transparent pricing
• Flexible cloud service models
• Less vendor lock-in
• Regional data protection compliance

Beyond data center site count, neoclouds are looking at a US$249 billion opportunity by 2030 in the form of Graphics Processing Unit-as-a-Service (GPUaaS). The top customer segment is, by far, technology & software companies, followed by media & entertainment, financial services, healthcare & life sciences, and other sectors.

ABI Research identified Nscale, Nebius, CoreWeave, and Vultr as the market leaders in its Neocloud Providers competitive ranking.

Table 1: Number of Data Centers by Operator Type

World Markets: 2025 to 2035

(Source: ABI Research)

2. AI Will Be the Dominant Data Center Workload by 2031

Recent analysis from ABI Research Chief Research Officer (CRO) Malik Saadi and Research Director Leo Gergs indicates that AI will overtake legacy workloads in terms of data center active Information Technology (IT) capacity by 2031. As enterprise Generative AI (Gen AI) and Agentic AI spending accelerates, workload capacities will reach about 44 Gigawatts (GW) by 2031 and 95 GW by 2035.

While AI will overtake legacy workloads, vendors and operators shouldn’t neglect legacy workloads; they will remain critical for less compute-intensive tasks in data center operations. Examples include GPU orchestration, data transfers, and storage.

Chart 1: Active Data Center IT Power Capacity by Workload (AI Versus Legacy)

World Markets: 2025 to 2035

(Source: ABI Research)

3. Hyperscalers Will Consolidate in Europe

The number of hyperscale data centers in Europe is forecast by ABI Research to drop from 1,067 in 2025 to 900 by 2035. This makes Europe the only region to experience a reduction in overall hyperscale sites.

While Europe’s physical hyperscale footprint is shrinking, its active IT capacity will grow nearly six-fold from 4.51 GW to 26.07 GW. Technology providers must increasingly support high-density cloud infrastructure and energy efficiency to attract and retain regional customers.

Table 2: Number of Hyperscale Data Centers by Region

World Markets: 2025 to 2035

(Source: ABI Research)

4. South Korea Will Be a Standout in the Sovereign Cloud Race

According to our Senior Research Director Dimitris Mavrakis, “South Korea is by far the most advanced and innovative market for sovereign cloud, especially if we consider a normalized metric, in this case sovereign data center capacity per capita. This translates to South Korea having the largest appetite to innovate for its citizens and protect its computing borders.”

Developed regions such as the United States, Europe, and China will naturally have higher total sovereign cloud capacities thanks to much larger populations. However, the small peninsula country of 51.6 million people punches well above its weight on an even playing field; it will reach nearly 35 Megawatts (MW) of capacity per citizen by 2035.

This trend is reflective of the South Korean government’s strict enforcement of data localization policies. Technology providers, notably SK Telekom, will be highly influential facilitators of sovereign cloud infrastructure build-out in the country (learn more in the ABI Research report, China and Europe Will Lead the Sovereign Cloud Race, but South Korea Will Be the Star).

Chart 2: Average Sovereign/Government Cloud Capacity per Citizen

World Markets: 2024 to 2035

(Source: ABI Research)

5. Data Centers in Space Will Get Closer to Commercial Reality

ABI Research market data show that there will be more than 18,000 Orbital Data Centers (ODCs) deployed by 2035, with 1.54 GW of effective compute power. As Principal Analyst Andrew Cavlier pointed out in his latest Q&A, space data centers are gaining traction due to limited energy availability on Earth. He states that ”The central challenge is ensuring energy gets sent to the right place at the right time. With data center grid interconnection timelines stretching to 10 years in some markets, enterprises and governments are beginning to set their sights on alternatives such as ODCs to meet surging compute demand.”

The earliest deployments are Kilowatt (kW)-scale and edge-based; use cases are primarily tied to defense, intelligence, Earth Observation (EO), and Compute-as-a-Service (CaaS).

Hyperscale data centers in space are what most of us envision. SpaceX, Starcloud, Amazon, and Google are leading the development of these large-scale ODCs. Commercial launches aren’t likely to materialize until the 2030s as launch economics gradually improve and technical barriers such as cosmic radiation are addressed by vendors.

Where Do These Trends Leave the Data Center Industry?

These data center trends signify a high-growth industry being redefined by new service models, geographic disparities, technological innovations, and cloud sovereignty.

At the top of the list of the biggest technology research topics today, data centers are right up there with AI. AI and cloud computing are inherently intertwined as the former is generating unprecedented demand for the latter. Not only are data center industry insights essential for service providers and tech vendors, but also for enterprise IT teams and government stakeholders responsible for scaling their cloud infrastructure in the coming years. In some cases, it is a matter of national security and grid stability.

ABI Research’s Data Centers Research Service is designed to advise the industry along its journey to a more technologically advanced, yet at the same time, secure future. We work with cloud service providers, semiconductor manufacturers, colocation operators, and data center infrastructure providers. Discover more data center industry trends our analysts will watch over the next decade by downloading the whitepaper, Winning the Next Wave of Data Center Growth.

If you’re ready to learn more about how we can serve your data center research goals, reach out to our sales team today.