Rack Server Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented by Form Factor (1U Rack Servers, 2U Rack Servers, 4U Rack Servers), By Price Range (Entry-Level Rack Servers, Mid-Range Rack Servers, High-End Rack Servers), By End-User Industry (Healthcare, IT and Telecom, Hospitality, Retail, Manufacturing), By Region, By Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 5.18 Billion
CAGR (2026-2031)	10.03%
Fastest Growing Segment	Mid-Range Rack Servers
Largest Market	North America
Market Size (2031)	USD 9.19 Billion

Market Overview

The Global Rack Server Market will grow from USD 5.18 Billion in 2025 to USD 9.19 Billion by 2031 at a 10.03% CAGR. A rack server is a standardized computer system designed to be installed within a vertical framework, allowing for the high-density consolidation of hardware resources to optimize data center floor space. The market is primarily supported by the intensifying demand for computational power to handle artificial intelligence workloads and the widespread adoption of hybrid cloud architectures. This growth is further sustained by the critical need for efficient edge computing infrastructure, which requires compact and scalable processing units to manage data closer to its source.

Nevertheless, the industry encounters a substantial challenge regarding thermal management and energy consumption limits. As organizations deploy more powerful hardware, the heat generated necessitates complex and costly cooling solutions that can exceed existing facility capabilities. According to AFCOM, in 2024, the estimated mean rack density rose to 12 kW per rack, a shift that forces operators to divert significant capital toward infrastructure retrofits. This rising operational complexity and the associated costs could potentially hinder market expansion for resource-constrained enterprises.

Key Market Drivers

The surge in artificial intelligence and machine learning workload deployment is fundamentally reshaping the Global Rack Server Market, driving the need for ultra-high-density configurations capable of supporting energy-intensive GPU clusters. As enterprises and research institutions train increasingly complex models, power and thermal envelopes are being pushed to their limits, necessitating advanced rack designs that integrate liquid cooling and optimized airflow. This architectural shift is evident in the financial performance of key hardware vendors who are pivoting to meet this specialized demand. According to Dell Technologies, August 2024, in the 'Second Quarter Fiscal 2025 Financial Results', demand for AI-optimized servers reached $3.2 billion, marking a 23% sequential increase as customers prioritized performance-intensive infrastructure.

Simultaneously, the rapid expansion of hyperscale and cloud data center infrastructure is accelerating market volume, as major cloud service providers continuously upgrade their fleets to deliver scalable, low-latency computing services. These hyperscalers are moving toward standardized, rack-scale solutions that reduce deployment time and operational complexity across their massive global footprints. According to Super Micro Computer, Inc., August 2024, in the 'Fourth Quarter and Full Fiscal Year 2024 Financial Results', annual revenue surged 110% to $14.9 billion, a growth trajectory heavily supported by rack-scale cloud and AI infrastructure deployments. Reinforcing this broader momentum, according to Hewlett Packard Enterprise, September 2024, in the 'Fiscal 2024 Third Quarter Results', server revenue climbed 35% year-over-year to $4.3 billion, highlighting the sustained investment in hardware modernization.

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Key Market Challenges

Thermal Management and Energy Consumption Limits

The expansion of the Global Rack Server Market is significantly impeded by the intensifying challenges of thermal management and strict energy consumption limits. As hardware manufacturers increase the processing density of servers to support artificial intelligence and edge workloads, the resulting thermal output often overwhelms the cooling capacities of existing data center facilities. This physical limitation creates a bottleneck where potential buyers are forced to delay server acquisitions because their infrastructure cannot safely dissipate the heat generated by modern high-performance units. The substantial capital required to retrofit facilities with advanced cooling systems diverts budget away from new server procurement, directly reducing market transaction volume and delaying hardware refresh cycles.

The severity of this efficiency struggle is quantified by recent industry performance data. According to the Uptime Institute, in 2024, the industry-wide average Power Usage Effectiveness (PUE) ratio remained stagnant at 1.56 for the fifth consecutive year. This metric indicates that for every unit of energy used for computing, a significant fraction is still expended solely on cooling and power distribution overhead rather than IT processing. The lack of improvement in this key efficiency indicator demonstrates that the sector faces a persistent barrier in managing the energy footprint of denser server configurations, thereby constraining the scalability of the market.

Key Market Trends

The Mainstream Adoption of Direct-to-Chip and Immersion Liquid Cooling is rapidly evolving from a niche high-performance computing requirement into a standard data center necessity. As thermal design power (TDP) for AI-optimized processors breaches the limits of traditional air cooling, enterprises are aggressively integrating liquid-based heat rejection technologies to maintain operational stability and density. This architectural pivot is validating the financial viability of advanced cooling technologies as a core revenue driver for hardware manufacturers. According to Lenovo Group Limited, May 2025, in the 'Q4 and Full Year Financial Results 2024/25', the Infrastructure Solutions Group achieved a 63% year-over-year revenue increase to a record $14.5 billion, a surge explicitly attributed to the accelerated adoption of its Neptune liquid cooling technology and AI infrastructure.

The Shift Toward OCP (Open Compute Project) Standardized Rack Designs is simultaneously reshaping the market by dismantling proprietary hardware silos in favor of modular, interoperable architectures. Data center operators are increasingly standardizing on open-specification racks to optimize supply chain flexibility, reduce capital expenditures, and accelerate the deployment of disaggregated server components. This trend is expanding beyond hyperscalers to telecommunications and enterprise sectors seeking to replicate the efficiency of cloud-scale infrastructure. According to the Open Compute Project Foundation, December 2025, in the '2025 Annual Adoption Study', the global spending on OCP-recognized IT infrastructure and solutions was projected to reach $132 billion in 2025, reflecting the widening acceptance of open hardware specifications across the industry.

Segmental Insights

Based on industry analysis, Mid-Range Rack Servers have emerged as the fastest-growing segment in the Global Rack Server Market. This expansion is primarily driven by the aggressive digital transformation of Small and Medium Enterprises (SMEs), which increasingly prioritize scalable virtualization and private cloud deployments. Mid-range units offer an optimal equilibrium between processing density and capital efficiency, enabling organizations to handle data-intensive workloads like analytics without the prohibitive expense of high-end infrastructure. Consequently, these servers are becoming the preferred solution for businesses seeking to modernize their data centers while maintaining strict control over operational costs.

Regional Insights

North America maintains a dominant position in the global rack server market, driven by the significant concentration of hyperscale data centers and cloud service providers within the United States. The region benefits from substantial investments in IT infrastructure and the widespread adoption of artificial intelligence by enterprise sectors. Additionally, the local presence of major server manufacturers allows for efficient supply chain management and rapid technology integration. High demand for data processing capabilities from financial institutions and technology firms further solidifies the region's market leadership.

Recent Developments

• In February 2025, Hewlett Packard Enterprise announced the launch of eight new HPE ProLiant Compute Gen12 servers, designed to handle complex workloads such as artificial intelligence and hybrid cloud computing. These new rack-mount systems feature the latest Intel Xeon 6 processors and introduce the Integrated Lights Out (iLO) 7 management technology, which provides enhanced security against quantum computing threats. The company highlighted that the Gen12 portfolio delivers significantly better performance per watt compared to previous generations. Additionally, the servers support direct liquid cooling options to effectively manage the thermal demands of high-density data centers.
• In November 2024, Dell Technologies expanded its infrastructure portfolio with the introduction of the PowerEdge XE9685L and PowerEdge XE7740 servers. The PowerEdge XE9685L is a liquid-cooled, 4U rack server capable of supporting dual 5th Generation AMD EPYC processors and up to 96 NVIDIA GPUs per rack, specifically engineered for machine learning and high-performance computing. These systems were launched as part of the Dell Integrated Rack 5000 program, which offers turnkey, pre-integrated rack-scale solutions. The company stated that these new products are designed to provide the density and energy efficiency required for large-scale artificial intelligence deployments.
• In October 2024, Supermicro announced the availability of a comprehensive rack-scale liquid cooling solution aimed at reducing the operational costs of large artificial intelligence clusters. This offering includes coolant distribution units, cold plates, and manifolds capable of dissipating over 100 kilowatts of heat per rack, making it suitable for the highest-wattage servers. The CEO of the company noted that this solution allows data centers to deploy dense computing infrastructure, such as systems featuring NVIDIA B200 GPUs, while maintaining optimal operating temperatures. The technology is designed to accelerate deployment times for both new and existing facilities.
• In June 2024, Lenovo unveiled its ThinkSystem V4 server portfolio, powered by Intel Xeon 6 processors, to enhance accessibility to artificial intelligence capabilities for businesses. The launch included the ThinkSystem SR630 V4, a rack server optimized for cloud service providers and telecommunications workloads, which offers high core density and improved performance. The company also introduced the ThinkSystem SD520 V4, designed to handle massive transaction processing and parallel workloads. These systems leverage the company's "Neptune" liquid cooling technology to increase energy efficiency, addressing the growing power consumption challenges in modern data center environments.

Key Market Players

• Hewlett Packard Enterprise
• Dell Technologies
• Lenovo Group Ltd.
• Cisco Systems, Inc.
• Huawei Technologies Co., Ltd.
• Inspur Systems
• Quanta Computer
• Super Micro Computer, Inc.
• Vertiv Holdings Co.
• Rittal GmbH & Co. KG

By Price Range	By End-User Industry	By Region
Entry-Level Rack Servers Mid-Range Rack Servers High-End Rack Servers	Healthcare IT and Telecom Hospitality Retail Manufacturing	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Rack Server Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Rack Server Market, By Price Range:

• Entry-Level Rack Servers
• Mid-Range Rack Servers
• High-End Rack Servers

• Rack Server Market, By End-User Industry:

• Healthcare
• IT and Telecom
• Hospitality
• Retail
• Manufacturing

• Rack Server Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE