Data Processing, Hosting, & Related Services
NAICS 518: U.S. data centers, hosting services — AI power demand, colocation trends, and energy infrastructure.
Industry at a Glance
Sector-wide aggregates across all businesses classified under NAICS 518 (2017 classification frame). For specific sub-industries within this sector, see the individual reports below.
NAICS 2022 renames this industry to “Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services”. Code and data unchanged.
Industry Overview
Data processing, hosting, and related services (NAICS 518) covers establishments that provide infrastructure for storing, processing, and distributing digital information, including data centers, web hosting, colocation facilities, and managed hosting services. The U.S. data center market, valued at approximately $50 billion in 2023, is concentrated in northern Virginia (Loudoun County alone hosts the world's densest cluster of data centers), with secondary hubs in Dallas, Phoenix, Chicago, and Hillsboro, Oregon. The 'Big Three' hyperscale cloud providers — Amazon Web Services, Microsoft Azure, and Google Cloud — account for over 65% of global cloud infrastructure spending but are classified partly under NAICS 5112 (software publishing) depending on service layer.
Colocation providers including Equinix (260+ data centers globally), Digital Realty, and CyrusOne serve enterprises that outsource physical infrastructure while retaining control of their computing environments. Total U.S. data center power consumption exceeded 20 gigawatts in 2023 and is projected to reach 35 GW by 2030, driven primarily by GPU-intensive AI training workloads. This energy demand has triggered power grid capacity concerns, particularly in Virginia where Dominion Energy faces a multi-year queue of data center interconnection requests. The SEC's 2024 climate disclosure rules and the EU's Corporate Sustainability Reporting Directive (affecting U.S. companies with EU operations) are increasing pressure on data center operators to report energy consumption and carbon intensity metrics.
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Industry Trends
AI training workload demand, particularly from large language models requiring thousands of NVIDIA H100/H200 GPUs per cluster, is driving data center power requirements beyond what existing grid infrastructure can support in primary markets like northern Virginia and central Ohio.
Nuclear power agreements, including Amazon's purchase of a data center campus adjacent to the Susquehanna nuclear plant in Pennsylvania and Microsoft's deal to restart Three Mile Island Unit 1, reflect the industry's search for baseload carbon-free electricity to power AI infrastructure.
Loudoun County, Virginia — home to 'Data Center Alley' and over 300 facilities — enacted new zoning restrictions in 2023 limiting data center development in certain residential-adjacent areas after community pushback over noise, traffic, and aesthetic impacts.
Liquid cooling adoption is accelerating as GPU power densities exceed 40 kW per rack, surpassing what traditional air cooling can handle. Equinix, Microsoft, and Google have deployed immersion cooling systems, and startups like GRC and LiquidCool Solutions are supplying technology for retrofit installations.
The SEC's 2024 climate disclosure rules require publicly traded data center operators to report Scope 1 and Scope 2 greenhouse gas emissions, and material Scope 3 emissions, creating new compliance obligations for Equinix, Digital Realty, and other public REITs that will affect how they report power procurement and renewable energy credit usage.
Available Reports
1 industry report available for purchase under Data Processing, Hosting, & Related Services.
Specialty Reports Available on Request
1 specialty industriesavailable on request▾
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Frequently Asked Questions
What is NAICS 518? ▾
Why is northern Virginia the world's largest data center market? ▾
How are AI workloads changing data center infrastructure requirements? ▾
What nuclear power deals have data center operators pursued? ▾
What are the SEC climate disclosure rules and how do they affect data center operators? ▾
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