Data center spending to more than double to $2.1 trillion by 2028

Global data center spending is expected to hit $1 trillion in 2026 and more than double to $2.1 trillion by 2028, BofA Global Research estimated in a note on Friday, driven by growing demand for and development of AI services.

Data center spending has been a fast-growing source of revenue for industrial firms that make generators, construction equipment, switchgears and chillers.

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The data center market, worth $275 billion in 2022, could reach $2.93 trillion by 2030, BofA said

AI is seen driving the expansion, which the brokerage says will fuel a 37% market-wide CAGR from 2025 to 2030, the brokerage said

Chipmakers and server developers have been among the biggest beneficiaries of the AI-driven data center buildout, particularly in the US

BofA put data center construction costs at $49 million per megawatt, with IT-related expenses making up 78% of total spend

Neoclouds, or AI-focused data centers, cost about $57 million per megawatt but benefit from lower space requirements than traditional counterparts

The brokerage estimates servers are the costliest component at $31.4 million per megawatt, and networking the second-largest at $4.8 million per megawatt

Most other functions - switchgear, power distribution, generators, backup power, chillers and cooling - cost between $100,000 to $1.1 million per megawatt.