BofA: Data center spending approaches a trillion dollars, with power and cooling driving equipment demand
BofA expects global data center spending to approach 1 trillion dollars in 2026, with servers, networking and storage accounting for the bulk; demand for grid connections, power distribution and cooling is flowing through to equipment and service providers.
Original source：BofA Global ResearchFirst published on Unhidea：Original source date：
Key takeaway
BofA sees opportunities across industries from expanding data center investment, but suppliers’ ability to convert them into revenue still depends on customer capital spending, equipment delivery and their own competitiveness.
Where is the trillion dollars in spending going?
BofA expects global data center spending to approach 1 trillion dollars in 2026, including about 839 billion dollars for servers, networking and storage and about 153 billion dollars for infrastructure. The bank expects data center capital spending to grow at a compound annual rate of 37% from 2025 to 2030, and infrastructure spending to grow at 27%.
Customer investment is the starting point of this chain. Combined capital spending by the major US cloud providers, emerging cloud providers and Chinese cloud providers tracked by BofA is expected to rise from about 510 billion dollars in 2025 to about 1.01 trillion dollars in 2026, and then to about 1.39 trillion dollars in 2027; growth is expected to slow from about 98% in 2026 to 37% in 2027.
How do power bottlenecks turn into equipment orders?
BofA believes land, power and data center buildings have become key constraints on AI buildout. In parts of the US, connecting to the grid takes 5–8 years, so projects are seeking on-site generation; Caterpillar’s engines and gas turbines can be used for primary or backup power, as well as natural gas pipeline compression.
Power supply demand is already reflected in INNIO’s orders: the company received 1.1 gigawatts of orders in the second quarter of 2026 and another 450 megawatts in September. BofA calculates that new second-quarter orders implied a price of about 625 million dollars per gigawatt, above the roughly 518 million dollars for shipments that quarter, with more favorable pricing terms on new orders.
As of October 2026, Wärtsilä had secured seven US data center projects totaling more than 3 gigawatts; one 282-megawatt project was booked in the third quarter and is scheduled for delivery in 2028. There is still a delivery lag before order growth becomes revenue, and the company faces risks from engine competition and a slowdown in data center development.
How do power distribution and cooling suppliers benefit?
Rising power consumption by AI chips is driving data center demand for power distribution equipment. BofA estimates that Eaton is the world’s third-largest supplier of data center electrical products, with offerings including uninterruptible power supplies, switchgear and transformers; following its acquisition of Boyd, it also entered liquid cooling.
Data centers and networks accounted for 30% of Schneider’s fiscal 2025 orders; orders in that business grew by triple digits in the first nine months of 2026. BofA believes its products span power distribution and cooling and could benefit from the shift to 800-volt direct-current architectures, but weaker construction activity and costly expansion affect the bank’s assessment of its profitability.
More complex liquid cooling systems also require design, installation and maintenance. Data centers accounted for 85% of Vertiv’s 2025 revenue, and field engineers contributed more than 2 billion dollars in data center service revenue; using advance payments as a proxy for orders, BofA estimates its second-quarter 2026 orders at 13 billion dollars. The bank lists execution of capacity expansion, new liquid cooling competitors and cloud providers’ spending cuts as constraints.
How is growth distributed among chip and networking equipment suppliers?
BofA believes that, in a power-constrained construction environment, customers place greater emphasis on how much revenue each gigawatt can generate. The bank expects Nvidia to retain more than 70% of AI system capital spending thanks to its full-stack products and ecosystem, and estimates its product value per gigawatt rises from about 18 billion dollars for Hopper to 25 billion dollars for Blackwell and 40 billion dollars for Rubin. Competition and access to power still affect this assessment.
The more processors an AI cluster contains, the larger its interconnect network, and demand for high bandwidth is driving switches toward higher speeds. Dell’Oro expects 1.6T and 3.2T equipment to account for a combined share of more than 70% of the data center switch market by 2030; meanwhile, BofA notes that Arista remains the leader in the 400G market but has lost share to Cisco and white-box suppliers.
BofA assigns buy ratings to Nvidia, Arista, Cisco and other companies. For networking equipment suppliers, fluctuations in major customers’ spending and competition can affect market share and margins; growth in industry investment does not directly translate into simultaneous gains for every company.
