Surge in Data Center Construction Driven by AI Adoption
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 56 minutes ago
0mins
Source: Fool
- Arm Holdings Growth Potential: Arm Holdings reported a record revenue of $1.49 billion in Q1 2026, up 20% year-over-year, with its chip architecture widely used in smartphones, positioning it to capture the largest share of the data center CPU market, which could double its royalty revenue, reflecting strong market demand and profitability.
- IREN Market Performance: IREN's stock surged 385% over the past year, with a current market cap of about $18 billion, yet its 5 gigawatts of grid-connected power portfolio may not fully capture its long-term growth potential in an AI-driven economy, with projected annualized revenue of $4.4 billion by 2026.
- Nvidia's Market Opportunities: Nvidia's data center revenue nearly doubled last quarter, with total revenue expected to rise 81% to $391 billion in 2023, as the upcoming Vera Rubin platform enhances its position as a leading AI hardware supplier, further solidifying its market leadership.
- AI-Driven Investment Opportunities: Morgan Stanley anticipates global data center construction costs to approach $3 trillion by 2028, presenting investors with opportunities to build significant wealth in AI companies over the next 20 years, particularly benefiting firms like Arm, IREN, and Nvidia from this trend.
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Analyst Views on ARM
Wall Street analysts forecast ARM stock price to fall
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 347.710
Low
120.00
Averages
160.58
High
201.00
Current: 347.710
Low
120.00
Averages
160.58
High
201.00
About ARM
Arm Holdings plc is a United Kingdom-based company. The Company is engaged in the design of central processing units (CPUs) and compute platforms for semiconductor chips. It develops and licenses CPU products and related technology. Its cloud and data center solutions include Arm AGI CPU and Arm Neoverse Compute Subsystems. The Arm Agentic Generalized Infrastructure (AGI) CPU is a production-ready system on a chip (SoC) for artificial intelligence (AI) data centers, delivering compute at scale. The Arm Neoverse Compute Subsystems (CSS) are pre-validated, performance-optimized compute platforms designed to accelerate infrastructure silicon development. The Company's primary markets include smartphone applications, processors and other chips used in mobile phones, consumer electronics, networking equipment, cloud and data center servers, automotive applications, Internet of Things (loT) and other embedded computing devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Surge in Data Center Construction Driven by AI Adoption
- Arm Holdings Growth Potential: Arm Holdings reported a record revenue of $1.49 billion in Q1 2026, up 20% year-over-year, with its chip architecture widely used in smartphones, positioning it to capture the largest share of the data center CPU market, which could double its royalty revenue, reflecting strong market demand and profitability.
- IREN Market Performance: IREN's stock surged 385% over the past year, with a current market cap of about $18 billion, yet its 5 gigawatts of grid-connected power portfolio may not fully capture its long-term growth potential in an AI-driven economy, with projected annualized revenue of $4.4 billion by 2026.
- Nvidia's Market Opportunities: Nvidia's data center revenue nearly doubled last quarter, with total revenue expected to rise 81% to $391 billion in 2023, as the upcoming Vera Rubin platform enhances its position as a leading AI hardware supplier, further solidifying its market leadership.
- AI-Driven Investment Opportunities: Morgan Stanley anticipates global data center construction costs to approach $3 trillion by 2028, presenting investors with opportunities to build significant wealth in AI companies over the next 20 years, particularly benefiting firms like Arm, IREN, and Nvidia from this trend.
See More
Surge in Enterprise Spending Driven by AI
- Arm Holdings Growth Potential: Arm Holdings achieved $1.49 billion in revenue in 2026, a 20% year-over-year increase, with its chip architecture widely used in smartphones, and is expected to capture the largest share of the data center CPU market, driving future royalty revenue to potentially double, highlighting its critical role in the growing AI compute demand.
- IREN Market Performance: IREN's stock surged 385% over the past year, yet with a market cap of only $18 billion, its 5 gigawatts of grid-connected capacity and long-term contracts with Microsoft and Nvidia indicate significant growth potential in an AI-driven economy, with projected annual revenue of $4.4 billion by 2026.
- Nvidia's Market Opportunities: Nvidia's data center revenue nearly doubled last quarter, with the new Vera CPUs expected to generate $20 billion in revenue, contributing to an overall revenue growth of 81% to $391 billion in 2026, showcasing its leadership in the AI hardware market.
- AI Data Center Construction: Morgan Stanley forecasts global data center construction costs to approach $3 trillion by 2028, as the demand for compute capacity from AI models continues to rise, leading to sustained enterprise investment in data centers that could create tremendous wealth opportunities for leading AI companies.
See More
Winners and Losers in the AI Boom Debate
- Micron's Earnings Ignite Market Reaction: Micron's earnings report revealed over a fourfold year-over-year revenue increase and provided guidance exceeding Wall Street expectations, despite a 13% drop on Tuesday, the stock rebounded 16% on Thursday, reflecting market confidence in its long-term supply agreements.
- Apple's Price Increases: Apple announced price hikes for several MacBook and iPad models due to soaring memory and storage costs, resulting in a 6.1% drop in stock price on Thursday, marking its first formal move to pass costs to consumers and highlighting hardware bottlenecks affecting tech giants.
- Semiconductor Sector Volatility: Concerns over the sustainability of AI infrastructure funding arose after reports that OpenAI might delay its IPO, leading to a more than 5% drop in semiconductor stocks on Friday, with Micron ultimately finishing the week down 0.15%.
- Falling Oil Prices Ease Inflation Concerns: While tech stocks struggled, falling oil prices to around $69 per barrel alleviated inflation worries, boosting economically sensitive stocks and helping the Dow Jones Industrial Average achieve a modest weekly gain.
See More
Google's TPU Powers AI Computing Surge
- TPU Market Advantage: Google's proprietary TPU chips power the Gemini chatbot, allowing it to stand out against OpenAI's ChatGPT, further solidifying Google's position in the rapidly growing cloud computing market, with projected Google Cloud revenue surging 64% to $96 billion in 2023.
- Efficiency and Cost Benefits: TPUs excel in AI tasks, delivering higher computational output with 20% to 40% lower energy consumption, enabling Google to attract AI startups with pricing 20% to 30% lower, enhancing its competitive edge in the cloud business.
- New Generation TPU Launch: Google's latest eighth-generation TPUs are split into training and inference variants, TPU 8t and TPU 8i, which can increase training speeds by three times and significantly reduce operational costs, with Gemini's service unit costs expected to drop by 78% by 2025.
- Collaboration with Blackstone: Google's TPU cloud venture with Blackstone secured $5 billion in initial equity, aiming to bring 500 megawatts of capacity online by 2027, representing a capital-light strategy that will further drive Google's expansion in the cloud computing sector.
See More
U.S. Stocks Close Lower on Friday, Chipmakers Weigh on Market
- Market Decline: The S&P 500 and Nasdaq 100 fell by 0.05% and 1.09% respectively on Friday, reaching two-week lows, indicating market sensitivity to the weak performance of chipmakers, which could undermine investor confidence.
- Chipmaker Sell-off: The significant drop in Samsung Electronics and SK Hynix shares led to a more than 5% decline in South Korea's Kospi Index, triggering a global downturn in semiconductor stocks and exacerbating market uncertainty.
- Oil Price Impact: WTI crude oil prices fell over 3% to a four-month low on Friday, which helps lower inflation expectations and supports the stock market, but also reflects potential slowdowns in global economic growth.
- Consumer Sentiment Revision: The University of Michigan's consumer sentiment index was revised upward by 0.6 to 49.5, although still below the expected 50.0, indicating a cautious consumer outlook that may affect future spending.
See More
US Stock Market Under Pressure as Chip Stocks Plummet
- Market Weakness: The S&P 500 and Nasdaq 100 indices fell by 0.07% and 0.75%, respectively, reaching two-week lows, indicating market sensitivity to the weak performance of chipmakers, which may lead to declining investor confidence.
- Chip Stock Plunge: The significant sell-off of Samsung Electronics and SK Hynix caused the South Korean Kospi index to drop over 5%, triggering a global decline in chip stocks and exacerbating market uncertainty.
- Oil Price Decline Impact: WTI crude oil prices fell by more than 3%, easing inflation expectations and supporting stocks; however, the recovery of crude exports to 75% of pre-war levels may influence future market dynamics.
- Consumer Sentiment Revision: The University of Michigan's consumer sentiment index was revised upward to 49.5, although still below the expected 50.0, reflecting cautious consumer attitudes towards the economic outlook, which could affect retail and consumer-related stocks.
See More
Surge in Data Center Construction Driven by AI Adoption
- Arm Holdings Growth Potential: Arm Holdings reported a record revenue of $1.49 billion in Q1 2026, up 20% year-over-year, with its chip architecture widely used in smartphones, positioning it to capture the largest share of the data center CPU market, which could double its royalty revenue, reflecting strong market demand and profitability.
- IREN Market Performance: IREN's stock surged 385% over the past year, with a current market cap of about $18 billion, yet its 5 gigawatts of grid-connected power portfolio may not fully capture its long-term growth potential in an AI-driven economy, with projected annualized revenue of $4.4 billion by 2026.
- Nvidia's Market Opportunities: Nvidia's data center revenue nearly doubled last quarter, with total revenue expected to rise 81% to $391 billion in 2023, as the upcoming Vera Rubin platform enhances its position as a leading AI hardware supplier, further solidifying its market leadership.
- AI-Driven Investment Opportunities: Morgan Stanley anticipates global data center construction costs to approach $3 trillion by 2028, presenting investors with opportunities to build significant wealth in AI companies over the next 20 years, particularly benefiting firms like Arm, IREN, and Nvidia from this trend.
See More
Surge in Enterprise Spending Driven by AI
- Arm Holdings Growth Potential: Arm Holdings achieved $1.49 billion in revenue in 2026, a 20% year-over-year increase, with its chip architecture widely used in smartphones, and is expected to capture the largest share of the data center CPU market, driving future royalty revenue to potentially double, highlighting its critical role in the growing AI compute demand.
- IREN Market Performance: IREN's stock surged 385% over the past year, yet with a market cap of only $18 billion, its 5 gigawatts of grid-connected capacity and long-term contracts with Microsoft and Nvidia indicate significant growth potential in an AI-driven economy, with projected annual revenue of $4.4 billion by 2026.
- Nvidia's Market Opportunities: Nvidia's data center revenue nearly doubled last quarter, with the new Vera CPUs expected to generate $20 billion in revenue, contributing to an overall revenue growth of 81% to $391 billion in 2026, showcasing its leadership in the AI hardware market.
- AI Data Center Construction: Morgan Stanley forecasts global data center construction costs to approach $3 trillion by 2028, as the demand for compute capacity from AI models continues to rise, leading to sustained enterprise investment in data centers that could create tremendous wealth opportunities for leading AI companies.
See More
Winners and Losers in the AI Boom Debate
- Micron's Earnings Ignite Market Reaction: Micron's earnings report revealed over a fourfold year-over-year revenue increase and provided guidance exceeding Wall Street expectations, despite a 13% drop on Tuesday, the stock rebounded 16% on Thursday, reflecting market confidence in its long-term supply agreements.
- Apple's Price Increases: Apple announced price hikes for several MacBook and iPad models due to soaring memory and storage costs, resulting in a 6.1% drop in stock price on Thursday, marking its first formal move to pass costs to consumers and highlighting hardware bottlenecks affecting tech giants.
- Semiconductor Sector Volatility: Concerns over the sustainability of AI infrastructure funding arose after reports that OpenAI might delay its IPO, leading to a more than 5% drop in semiconductor stocks on Friday, with Micron ultimately finishing the week down 0.15%.
- Falling Oil Prices Ease Inflation Concerns: While tech stocks struggled, falling oil prices to around $69 per barrel alleviated inflation worries, boosting economically sensitive stocks and helping the Dow Jones Industrial Average achieve a modest weekly gain.
See More
Google's TPU Powers AI Computing Surge
- TPU Market Advantage: Google's proprietary TPU chips power the Gemini chatbot, allowing it to stand out against OpenAI's ChatGPT, further solidifying Google's position in the rapidly growing cloud computing market, with projected Google Cloud revenue surging 64% to $96 billion in 2023.
- Efficiency and Cost Benefits: TPUs excel in AI tasks, delivering higher computational output with 20% to 40% lower energy consumption, enabling Google to attract AI startups with pricing 20% to 30% lower, enhancing its competitive edge in the cloud business.
- New Generation TPU Launch: Google's latest eighth-generation TPUs are split into training and inference variants, TPU 8t and TPU 8i, which can increase training speeds by three times and significantly reduce operational costs, with Gemini's service unit costs expected to drop by 78% by 2025.
- Collaboration with Blackstone: Google's TPU cloud venture with Blackstone secured $5 billion in initial equity, aiming to bring 500 megawatts of capacity online by 2027, representing a capital-light strategy that will further drive Google's expansion in the cloud computing sector.
See More
U.S. Stocks Close Lower on Friday, Chipmakers Weigh on Market
- Market Decline: The S&P 500 and Nasdaq 100 fell by 0.05% and 1.09% respectively on Friday, reaching two-week lows, indicating market sensitivity to the weak performance of chipmakers, which could undermine investor confidence.
- Chipmaker Sell-off: The significant drop in Samsung Electronics and SK Hynix shares led to a more than 5% decline in South Korea's Kospi Index, triggering a global downturn in semiconductor stocks and exacerbating market uncertainty.
- Oil Price Impact: WTI crude oil prices fell over 3% to a four-month low on Friday, which helps lower inflation expectations and supports the stock market, but also reflects potential slowdowns in global economic growth.
- Consumer Sentiment Revision: The University of Michigan's consumer sentiment index was revised upward by 0.6 to 49.5, although still below the expected 50.0, indicating a cautious consumer outlook that may affect future spending.
See More
US Stock Market Under Pressure as Chip Stocks Plummet
- Market Weakness: The S&P 500 and Nasdaq 100 indices fell by 0.07% and 0.75%, respectively, reaching two-week lows, indicating market sensitivity to the weak performance of chipmakers, which may lead to declining investor confidence.
- Chip Stock Plunge: The significant sell-off of Samsung Electronics and SK Hynix caused the South Korean Kospi index to drop over 5%, triggering a global decline in chip stocks and exacerbating market uncertainty.
- Oil Price Decline Impact: WTI crude oil prices fell by more than 3%, easing inflation expectations and supporting stocks; however, the recovery of crude exports to 75% of pre-war levels may influence future market dynamics.
- Consumer Sentiment Revision: The University of Michigan's consumer sentiment index was revised upward to 49.5, although still below the expected 50.0, reflecting cautious consumer attitudes towards the economic outlook, which could affect retail and consumer-related stocks.
See More
