The market for immersion cooling is poised for rapid expansion as AI infrastructure drives unprecedented demand for high-density computing and more efficient thermal management, according to a new report from Straits Research.

The research estimates that the global data center immersion cooling market, valued at $1.84 billion in 2025, will reach $11.76 billion by 2034, representing a 23% compound annual growth rate (CAGR). The market is expected to grow to $2.25 billion in 2026.

Immersion cooling is an alternative to traditional air cooling in which servers and IT equipment are submerged in thermally conductive, non-conductive dielectric liquids. The approach is designed to remove heat more efficiently while supporting increasingly dense AI and high-performance computing (HPC) deployments.

According to the report, the market is being driven by growing adoption of AI workloads, cloud computing, hyperscale data centers and HPC, all of which are increasing power densities inside data centers. Operators are also investing in more energy-efficient cooling technologies as they seek to reduce power consumption and improve overall facility performance.

Straits Research noted that North America accounted for 40.6% of the global immersion cooling market in 2025, supported by continued hyperscale expansion, AI infrastructure investment, and early adoption of advanced liquid cooling technologies. The U.S. market alone was valued at approximately $590 million in 2025.

Meanwhile, Asia-Pacific is expected to be the fastest-growing region, with a projected 25.8% CAGR during the forecast period.

Among technologies, single-phase immersion cooling represented the largest segment in 2025, accounting for 63.42% of the market. By data center type, hyperscale facilities held the largest share at 44.58%, while cloud service providers accounted for 45.92% of end-user demand, the research firm noted.