Industry research
Scope
US
Companies
68
Table of contents
What does the Hosting market landscape look like in the US?
The US hosting market exhibits varied levels of consolidation across different segments. In 2024, the US was the largest market, accounting for ~51.5% of the global web hosting market share. Herein, leaders such as GoDaddy, Amazon (US; AWS), Alphabet (US; Google Cloud) and Newfold Digital (Bluehost) collectively held >35% of the 2024 US web hosting market. Meanwhile, Equinix and Digital Realty lead the global data center market, with ~13% and ~11% market share, respectively. On the other hand, the US managed hosting services market is fragmented and competes with large telecom (e.g. Lumen Technologies), cloud (e.g. AWS) and IT consultancy firms (e.g. IBM). To compete with the large players across segments, the long tail focuses on specific niches, geographies or target markets. For example, A2 Hosting targets niche markets such as developers, high-traffic websites and those requiring performance optimization, while EdgeCore Digital Infrastructure targets regional markets by operating data center facilities across four US states.
What is the level of investor activity in the US Hosting industry?
Investor-led interest has been significant, with ~58% of identified assets being backed by financial sponsors (as of January 2025). Investors are primarily attracted by the market's favorable long-term outlook driven by (i) the rise of next-gen applications (e.g. AI) increasing cloud and data center demand, (ii) e-commerce and online shopping growth boosting web hosting needs and (iii) significant investments in digital infrastructure across the US boosting hosting industry growth. On the other hand, deterring factors include (i) increasing competition from large-scale global cloud technology providers, (ii) evolving regulatory requirements and data privacy risks, including concerns over data breaches and (iii) staffing shortages at data centers.
What are the key ESG considerations in the US Hosting industry?
ESG considerations primarily relate to environmental and governance challenges. Environmental topics relate to substantial energy and water requirements for data center cooling systems. To address these concerns, incumbents sign power purchase agreements with renewable energy providers and adopt water-efficient cooling systems and rainwater harvesting to reduce water consumption. Governance aspects revolve around the risk of data breaches, which can result in financial, reputational and regulatory damages. To mitigate this, hosting providers implement a multi-layered strategy to enhance cyber threat defense and minimize breach impacts.
Technavio (October 2024) estimates that the North American colocation and managed hosting services market generated ~$95.0bn in revenue in 2023 and expects it to reach ~$183.7bn by 2028 (+14.1% CAGR 2023-2028)
Statista (April 2024) forecasts the US web hosting market will reach ~$69.7bn in size in 2025 and expects it to grow to ~$127.2bn by 2029 (+16.2% CAGR 2025-2029)
The emergence of next-generation applications such as augmented and virtual reality, IoT and AI will drive businesses to migrate critical data and applications to cloud platforms, thereby increasing the demand for data center capacity. To illustrate, the global demand for AI-ready data center capacity is expected to grow by ~33% annually from 2023 to 2030 (interviews by Gain.pro; McKinsey & Company, October 2024; KKR, February 2024; PowerLine, December 2023)
The continued growth of online shopping and e-commerce is expected to drive the demand for robust web hosting services that handle increased traffic and transaction volumes. To illustrate, the e-commerce market share of total retail sales in the US is expected to rise to ~35% by 2030, up from ~22% in 2023 (Hostopia, December 2024; Retail Dive, July 2024; MilesWeb, March 2024)
Significant investments in digital infrastructure across the US enhance areas with robust fiber optic networks and reliable power supplies, making them ideal for data centers. Additionally, the ~$42.5bn investment allocated by the Broadband Equity, Access and Deployment (BEAD) program for broadband improvement in underserved areas in the US will indirectly benefit hosting providers (Linklaters, May 2024; Washington Post, June 2023)
Increasing competition from major cloud providers such as Amazon’s AWS, Microsoft’s Azure and Alphabet’s Google Cloud, which leverage economies of scale, bundled service offerings and pricing power, making it challenging for smaller hosting companies to compete, likely pushing out undifferentiated web hosting providers (interviews by Gain.pro; CloudZero, July 2024)
Rising energy costs and limited power availability are raising operational expenses for data centers. As more facilities are built and power demands rise, supply issues are emerging in traditional data center hubs (e.g. Northern Virginia, Santa Clara). Additionally, the rise of low-latency applications is driving data centers closer to urban areas, making land acquisition costly and time-consuming, with rental rates expected to rise ~14.5% YoY (interviews by Gain.pro; McKinsey & Company, October 2024; LightBox, October 2024)
Staffing shortages remain a significant issue for data centers, with ~60% of operators surveyed by Forbes citing that they struggle to find qualified candidates and retain staff. These challenges contribute to more outages and accidents, damaging both revenue and incumbents’ reputations (Per Scholas, September 2024; serverLIFT, October 2023)
With the full report, you’ll gain access to:
Detailed assessments of the market outlook
Insights from c-suite industry executives
A clear overview of all active investors in the industry
An in-depth look into 68 private companies, incl. financials, ownership details and more.
A view on all 327 deals in the industry
ESG assessments with highlighted ESG outperformers
