Key Takeaways
- You’ll find five top data center stocks thriving on AI, cloud, and digital growth in 2025.
- Our top picks indicate strong revenue, innovation, and market leadership in the data center space.
- The global data center market is set to grow at a 9.29% CAGR through 2033 reaching over $700 billion.
Introduction
Fueled by the increasing demand for AI products, data center stocks are heating up as potentially long-term growth opportunities among investors. I've spent a good amount of time uncovering which of these stocks pose the best opportunity for potentially maximum returns.
The trick is picking stocks tied to the digital surge, blending growth and stability, at least from what I've learned. Let's dive in and discuss which stocks should be on your 2025 wishlist.
What are data center stocks?
Put simply, data center stocks are similar to any other stock you invest in. The difference is its association with the data center industry. These associations can be based on whether these firms own, operate, or supply services that offer cloud services, AI, and more.
The capacity to which these stocks support the industry is entirely based on your opinions and interpretation. However, I have included a broad selection of stocks that support every aspect of the industry's value chain to ensure your portfolio has exposure to all areas of the industry.
Best data center stocks
Here's a lineup of wishlist data center stocks that you should keep an eye on throughout 2025.
- Digital Realty (DLR) - Known for its stability
- Equinix (EQIX) - Popular for its global reach
- Super Micro Computer (SMCI) - Known for its innovation
- NVIDIA (NVDA) - Best for its hardware
- Vertiv (VRT) - Best for its infrastructure
Why these stocks made our 2025 wishlist?
Researching and figuring out which stocks would serve your portfolio is no easy feat, as we need to ensure each stock serves every aspect of the industry, and has the potential to thrive within it. Below is the checklist I used to decipher which stock made our list.
- Growth drivers: Strong AI, cloud, or 5G industry exposure.
- Revenue strength: The stocks must have a stable revenue of >$1 billion/year.
- Market positioning: These stocks must be positioned in high-growth areas within the cloud computing industry.
- Analyst approved: Have strong support from analysts.
These are the minimum requirements we identified to make our list of bullish data center stocks.
Best for REIT stability
Digital Realty (DLR)
Digital reality is at the top of the list as a REIT stock focusing on developing and managing large data centers, most notably for companies like AWS. DLR currently owns over 300 facilities globally, and in 2024, Digital Reality's revenue was $5.55 billion, an increase of 15% compared to the previous year.
Why Digital Reality?
If this stock's revenue and expansive assets are insufficient, its 3.5% dividend yield might be. DLR has historically paid out dividends over the last 17 years, making it an attractive stock for dividend seekers.
Although DLR is attractive, it can be prone to high interest rates due to its $16.7 billion debt ceiling. Currently, high interest rates (4.3%) could minimize the company's dividends and become less attractive to investors.
Best for Global Reach
Equinix (EQIX)
Considered the global kingpin for the data center industry. Equinix currently manages over 270+ facilities across 70 markets. The company mostly focuses on powering interconnectivity for cloud and AI workloads, and in 2024, Equinix''s revenue was $8.7 billion, an increase of 7% compared to the previous year.
Why Equinix?
Equinix is in a strong position to capitalize and benefit from the data center industry. The company has created over 463,000 interconnections in Q4 2024, up 5% compared to Q3 2024, and has contributed a further 90 MW of capacity to the industry through its xScale program.
However, the company still has potential risks it needs to overcome, such as, intense competition from Digital Realty and hyperscalers potentially leading to market saturation (rental rate growth slowed to 5% in Q3 2024), and its reliance on hyperscale clients like AWS creating concentration risk, exposure to geopolitical and economic volatility across 30+ countries.
Best for Server Innovation
Super Micro Computer (SMCI)
A personal favorite of mine, regardless of the company's mistrust among the media. SMCI is a global leader in the production of high-performance, highly efficient servers for data centers. The company reported a staggering revenue of $14.9 billion, up by 110% compared to 2023.
Why Super Micro Computer?
With the increasing demand for data centers and, in turn, high-performance servers, SMCI is well-positioned to capitalize on the industry's growth. Its partnerships with NVIDIA and innovations like liquid-cooling systems (targeting 30% of server racks) enhance its edge in energy-efficient solutions. This makes it appealing if AI infrastructure demand continues to surge.
However, as you may have heard, SMCI was recently called out by the SEC due to not being financially transparent and delayed its 10 K filings following the resignation of the company's auditors. These uncertainties may cause doubt over SMCI's stock and may deter investors from investing in their stock.
Best for AI Hardware
NVIDIA (NVDA)
Where would we be if I didn't mention Nvidia? This stock has already achieved substantial heights and solidified it as the most important company for data center and AI services globally. In 2024, Nvidia's stock surged by 171% and becoming the highest-valued company in history.
Why Nvidia?
Surely, it goes without saying, however, the AI industry will likely not be capable of processing its solutions without Nvidia's GPUs. Although Nvidia's stock price dipped after the announcement of the Chinese alternative to ChatGPT, the company's GPU chips have proven AI development is accessible to large corporates and startups across the board.
However, Nvidia's current stock price-to-market cap may deter investors. Nvidia's P/E ratio is 42+ (whereas the industry average is 20/25), and there are mounting concerns over sustainability as Nvidia has seen a 5-year surge in price, generating a bubble that could falter and wreak havoc across the financial markets.
Best for Infrastructure Tech
Vertiv (VRT)
Critical to the data center infrastructure, mainly focused on power and cooling services. The company's sales increased by 19% YoY capturing $1.94 billion in revenue throughout 2024 and projected to increase this by 16% throughout 2025.
Why Vertiv?
The company has a strong partnership with Nvidia, and focuses on generating energy-efficient innovations such as liquid cooling, a key component for AI-drive data centers. Numerous analysts have given Vertiv a "buy" rating, forecasting its stock price to reach $145+ in 2025.
However, its stock dropped 15% in late 2024 amid fears of an AI spending slowdown. Its reliance on a few hyperscale clients for growth exposes it to demand fluctuations, and thinner margins (EBITDA margin 20.7% in Q3 2024) compared to peers like NVIDIA could pressure profitability if costs rise. These could indicate careful sentiment prior to investing in VRT.
Conclusion
There's a list of 5 bullish data center stocks for you to consider. We are all aware the AI industry is booming and it seems a new AI company pops up every day, and this growth will require the expansion of data centers to support all these "AI companies."
These stocks are very much riding the AI, cloud, and digital waves, backed by solid financials and strong sentiment. The data center market’s 9.29% CAGR through 2033 screams opportunity. Now it's down to you to decide which stock best suits your needs.
Frequently Asked Questions
What stock should I buy because of DeepSeek?
One stock to consider is Nebius Group (NBIS), a data center company that could capitalize on the sustained demand for AI infrastructure despite DeepSeek’s efficiency gains. Unlike Nvidia, which saw a record $600 billion market-cap loss due to fears of reduced chip demand, Nebius benefits from its close partnership with Nvidia and a reported tripling of revenue in 2024, driven by high demand for its data center services.
What is the future of the data center market?
Companies like Meta, planning a $65 billion capex spend in 2025, signal an unwavering commitment to AI infrastructure, even post-DeepSeek. While short-term volatility persists, evidenced by a $1 trillion global equity drop in January, long-term trends point to a robust market, with data centers evolving to support both efficient and compute-heavy AI workloads.
Which data center stock suits beginners?
For beginners seeking a stable entry into the data center sector amid DeepSeek-induced turbulence, Digital Realty Trust (DLR) stands out as a reliable choice. This real estate investment trust (REIT) has delivered a 48% gain over the past year. It offers a 3.4% dividend yield, providing both growth and income, key for novice investors wary of volatility.
