AI really exploded in 2025 with the growth of agentic AI and widespread use of generative AI. AI heavily relies on data centers to run the LLMs upon which the technology is based, and there are many trends that every watcher of the data center industry should keep an eye on in 2026. We discuss some of the most notable ones.
Accelerated adoption of liquid cooling systems is likely to grow within the data center industry this year. AI servers require lots of water to stay cool, and this resource is becoming scarcer and more expensive. As tech companies try to outcompete each other while at the same time implementing cost-cutting measures that are sustainable, liquid cooling will gain even more prominence in 2026. These systems are more cost-effective and are better able to cool AI servers when compared to the existing systems currently in use.
AI infrastructure regulation is another trend that is worth tracking. 2025 ended with minimal regulation of the AI space, especially in the U.S. However, as more limitations of this technology come to light, the drive to put in place requisite regulations for the industry is likely to gather steam in 2026. Already, several states have drafted or passed a variety of laws targeting the AI industry, and this trend is likely to gain momentum as the year progresses.
The deployment of edge AI is also likely to accelerate in 2026. The need to have faster AI systems will drive more tech companies to favor data centers that are closer to the end users of their systems so that the lag that comes with transmitting workloads from data centers in distant locations is eliminated. It shouldn’t therefore be surprising when we see more data centers being constructed closer to densely populated cities where the target market of AI systems is located.
Another trend that is likely to play out in 2026 is the increasing preference of on-site power at data centers. AI data centers are notoriously power hungry, and many projects have delayed to come online because of a long queue of facilities waiting to be connected to the grid. Utility companies have sounded the alarm that they may be unable to supply all the projected power needed by planned data center projects. Tech companies have responded to this need by going as far as generating their own power so that they don’t have to rely on the grid.
More companies are likely to wake up to this workaround and we are bound to see more data centers having their own power generation facilities onsite to guard against grid outages and limited energy supplies.
As the year progresses, analysts will be watching which of these trends major technology companies like Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG) rapidly implement and scale in their bid to assert their dominance in the AI industry.
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