This paper addresses the technical and economic issues associated with waste heat recovery in data centers through the use of absorption cooling machines. The theoretical possibility of utilizing the heat dissipated by a server, or a number of servers, to power an absorption system, which in turn produces cooling for other servers in the data center, is investigated. For this purpose, a steady-state thermodynamic model is developed to perform energy balance and exergy analyses for a novel configuration of an on-chip two-phase cooling system and an absorption refrigeration system. This combination is created by replacing the condenser in the on-chip cooling circuit with the generator of an absorption refrigeration cycle. The performance of the developed model in simulating both LiBr-water and water-ammonia absorption cooling systems is examined through verification of the model results against the reference data available in the literature. The verification indicates the superiority of LiBr-water absorption system for data center/server operating conditions. Therefore, a LiBr-water absorption refrigeration system is modeled in the novel combined heat recovery system. For these systems it is shown that the traditional definition for the coefficient of performance (COP) is not appropriate to evaluate the performance and, in its place, introduce a new figure of merit. Through a sensitivity analysis, the effects of server waste heat quality, server coolant type, solution peak concentration, solution heat exchanger effectiveness, evaporator temperature, and operating pressures on the performance of the novel system are investigated. Finally, using the thermodynamic model and cost information provided by the absorption refrigeration industry, an economic analysis is carried out to calculate the payback period when this technology is used for data center waste heat recovery. (C) 2014 Elsevier Ltd. All rights reserved.