In this article, we take a look at the 12 best data center stocks to buy, as selected by analysts. If you want to skip the article on the world’s hottest data center industry right now, read on. The 5 best data center stocks to buy, according to analysts.
The stock market in 2024 will look very different than what investors expected at the beginning of the fourth quarter of 2021. At the time, the Federal Reserve had not yet begun raising interest rates, even though some voices on Wall Street were sounding the alarm about raising rates. The effects of monetary policy and economic stimulus measures during the lockdown period due to the novel coronavirus infection. High interest rates naturally do not bode well for high-growth sectors, especially after Russia’s invasion of Ukraine disrupted global food and energy markets and spurred years of high inflation levels. The market was in a difficult situation. Some wonder if the Fed’s consecutive 75 basis point interest rate hikes were still a bit low.
As the first quarter of 2024 draws to a close, the stock market landscape is fundamentally changing with the rise of NVIDIA Corporation (NASDAQ:NVDA). NVIDIA is of It’s Wall Street’s most popular artificial intelligence stock, with the multi-billion global data center industry at its heart. Most people have experienced the user side of his AI, but at its core, the technology is part of broader data analysis techniques such as machine learning.
Whether it’s AI or ML, both require large amounts of data to usher in cutting-edge applications in high-tech industries like semiconductor manufacturing. Processing and storing this data requires sizable data center facilities, large computing houses that “host” equipment such as graphics processing units (GPUs) and storage modules.
A variety of companies serve the needs of the global data center industry. The best known companies in this field include NVIDIA Corporation (NASDAQ:NVDA), Intel Corporation (NASDAQ:INTC), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Taiwan Semiconductor Manufacturing Company (New York Stock Exchange: TSM). On the software side, companies like Microsoft Corporation (NASDAQ:MSFT), International Business Machines Corporation (NYSE:IBM), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG) are helping businesses It offers similar functions. A software environment that generates meaningful insights from data.
So, to analyze the performance of data center stocks, you can either look at the performance of individual companies, such as the stocks mentioned above, or you can track a collection of stocks called exchange-traded funds (ETFs). Because operating and owning a data center has significant real estate requirements, some of the most popular data center ETFs also include real estate investment trusts (ETFs). One such ETF is the Global X Datacenter REIT and Digital Infrastructure ETF. The six-month, 12-month, and 36-month annualized returns are 14.5%, 22.27%, and 2.10%, respectively. As expected, the ETF’s annual return in 2022 was negative as the broader technology sector took a hit.
Finally, one stock that can help you stay on top of trends in the broader data center industry is Digital Realty Trust, Inc. (NYSE:DLR). Here’s what Baron Funds said about this particular stock in its Q4 2023 investor letter:
We reduced significant investments in data centers following strong stock price performance REIT Digital Realty Trust Co., Ltd. We remain optimistic about the company’s long-term potential.
Data center landlords like Digital Realty (and Equinix, Inc.) are facing record low vacancy rates, demand outstripping supply, more constrained power availability and rental rates. has benefited from the rise in Several long-term demand vectors that are currently expanding are contributing to strong fundamentals in the data center space around the world. These include outsourcing of information technology infrastructure, increased adoption of cloud computing, continued growth in mobile data and internet traffic, and artificial intelligence as a new wave of data center demand.
Over the past few months, we also spent time with Andy Power, CEO of Digital Realty. Over the past few years, Andy and his Digital Realty management team have been transforming their business, and in March 2020, he acquired Interxion, a European network-dense data center operator. has accelerated. The company has shed non-core, low-growth assets, invested and expanded in Europe, grown its retail colocation business, improved its balance sheet and added operational expertise by adding new management. Ta. We have spent a lot of time with Andy over the years and believe the investments the company has made are bearing fruit and will pay dividends for many years to come. Additionally, the fundamentals of our core business are at an inflection point due to strong demand/bookings, pricing power, hyperscale cloud players outsourcing a higher percentage of their digital infrastructure needs, and limited competitiveness. That’s what I think. We believe these factors will lead to core business growth in the coming years and are optimistic about the company’s long-term prospects.
With these details in mind, let’s take a look at some of the best data center stocks that are undervalued by analysts. Topping the list are VNET Group, Inc. (NASDAQ:VNET), IHS Holding Limited (NYSE:IHS), and Applied Digital Corporation (NASDAQ:APLD).
Silhouettes of data center facilities at dusk, demonstrating the company’s focus on data center solutions.
our methodology
To create a list of the best data center stocks according to analysts, we ranked the data center constituents of the Global I chose a large brand.
We tapped into hedge fund sentiment for these undervalued data center stocks. The top 10 consensus stocks selected by hedge funds have outperformed the S&P 500 index by more than 140 percentage points over the past 10 years (Please see here for the detail). That’s why we pay close attention to this often ignored metric.
the best data center Stocks to buy according to analysts
12. Micron Technology (NASDAQ:MU)
Number of hedge fund shareholders in Q4 2023: 92
Target price upside range: 1%
Latest average price target: $94
Micron Technology, Inc. (NASDAQ:MU) is an interesting data center stock because it is one of the world’s leading manufacturers of high-end data storage semiconductors. The stock appears to be fairly valued, with analysts’ average price target increasing by just 1%.
In the fourth quarter of 2023, 92 of the 933 hedge funds surveyed by Insider Monkey invested in Micron Technology, Inc. (NASDAQ:MU). Ken Griffin’s Citadel Investment Group is the company’s largest hedge fund investor in our database, with his $604 million investment.
Micron Technology, Inc. (NASDAQ:MU) joins IHS Holding Limited (NYSE:IHS), VNET Group, Inc. (NASDAQ:VNET), and Applied Digital Corporation (NASDAQ:APLD) on the Analysts’ List of Best Data Center Stocks I joined. Pick.
11. Digital Realty Trust, Inc. (NYSE:DLR)
Number of hedge fund shareholders in Q4 2023: 35
Target price upside range: 1%
Latest average price target: $143
Digital Realty Trust, Inc. (NYSE:DLR) is a real estate investment trust serving the needs of data center companies. The company made a big announcement in March 2024 amidst the AI hype, sharing that its energy-saving AI platform will help the environment in Asia.
Insider Monkey examined the portfolios of 933 hedge funds in the December quarter of last year and found that 35 had invested in the company. Among these, Digital Realty Trust, Inc. (NYSE: DLR)’s largest stakeholder is Ken Griffin’s Citadel Investment Group, which owns a $134 million stake.
10. Microchip Technology, Inc. (NASDAQ:MCHP)
Number of hedge fund shareholders in Q4 2023: 43
Target price upside range: 5%
Latest average price target: $93
Microchip Technology Incorporated (NASDAQ:MCHP) manufactures and sells semiconductor products such as microcontrollers and microprocessors. The hype surrounding AI semiconductor stocks has been good for the company, which beat analyst EPS estimates in each of the last four quarters.
In terms of holdings in Q4 2023, 43 out of 933 hedge funds in Insider Monkey’s database purchased Microchip Technology Incorporated (NASDAQ:MCHP) stock. Kerr Nielson’s Platinum Asset Management was the largest investor with a $141 million investment.
9. Equinix Inc. (NASDAQ:EQIX)
Number of hedge fund shareholders in Q4 2023: 56
Target price upside range: 7%
Latest average price target: $923
Equinix, Inc. (NASDAQ:EQIX) is one of the world’s largest data center real estate companies. March 2024 is shaping up to be an important month for the company, as a former Google Cloud executive has been named its next CEO. Equinix Inc. (NASDAQ:EQIX) stock is also highly regarded, with an average rating of Strong Buy.
Insider Monkey looked at the stock holdings of 933 hedge funds’ portfolios in the December 2023 quarter and found that 56 had an investment in the company. The largest hedge fund shareholder in Equinix, Inc. (NASDAQ:EQIX) in our database is Philippe Laffont’s Cortue Management with US$452m worth of shares.
8. Silicon Motion Technology Corporation (NASDAQ:SIMO)
Number of hedge fund shareholders in Q4 2023: 44
Target price upside range: 11%
Latest average price target: $82
Silicon Motion Technology Corporation (NASDAQ:SIMO) is a Hong Kong-based manufacturer of solid-state storage devices whose products are used to store data in data centers. Analysts appear to be positive about the stock, as well-known companies such as JPMorgan and Wedbush rate it as “overweight” and “outperform.”
In the final quarter of last year, 44 of the 933 hedge funds tracked by Insider Monkey were shareholders in Silicon Motion Technology Corporation (NASDAQ:SIMO). Robert Emil Zellner’s Alpine Associates held the largest stake, valued at $58.5 million.
7. American Tower Corporation (NYSE:AMT)
Number of hedge fund shareholders in Q4 2023: 56
Target price upside range: 16%
Latest average price target: $228
American Tower Corporation (NYSE:AMT) is a communications and data center real estate investment trust (REIT) headquartered in Boston, Massachusetts. The stock has an average rating of “Buy” and an average analyst price target of $227.56.
As of the end of December 2023, 56 of the 933 hedge funds surveyed by Insider Monkey held shares in the company. American Tower Corporation (NYSE:AMT) hedge fund’s largest shareholder is Charles Acre’s Acre Capital Management with 6.8 million shares worth $1.4 billion.
6. DigitalBridge Group, Inc. (NYSE:DBRG)
Number of hedge fund shareholders in Q4 2023: 31
Target price upside range: 21%
Latest average price target: $23
DigitalBridge Group, Inc. (NYSE:DBRG) is also a data center real estate investment trust. The company’s stock price fell 7% after the latest earnings release. This means that despite strong high-double-digit fee revenue growth, investors still believe that Digital Bridge Group (NYSE: DBRG)’s data center financing efforts are driving results. This is because they are not convinced.
31 of the 933 hedge funds in Insider Monkey’s Q4 2023 database held DigitalBridge Group, Inc. (NYSE:DBRG) stock. Charles Akre’s Akre Capital Management became the largest shareholder with his $77 million stake.
VNET Group, Inc. (NASDAQ:VNET), DigitalBridge Group, Inc. (NYSE:DBRG), IHS Holding Limited (NYSE:IHS), and Applied Digital Corporation (NASDAQ:APLD) are top data center stocks among analysts. It is mentioned.
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Disclosure. none. 11 Best Data Center Stocks Picked by Analysts Originally published on Insider Monkey.
