Top Stocks Poised to Benefit from the AI Data Center Boom
Invest in Tomorrow: Stocks Positioned for the AI Data Center Surge
The future of the technology sector is tightly linked to advancements in artificial intelligence (AI) and the underlying infrastructure that supports it. As companies increase their investments in AI capabilities, there is a notable surge in the construction and expansion of data centers around the globe.
Market research indicates that the data center construction industry is set to grow significantly—from $240 billion in 2024 to $456 billion by 2030, according to Grand View Research. Meanwhile, Statista estimates the AI server market could experience an almost tenfold increase, potentially reaching $430 billion by 2033.
Investors looking to capitalize on these developments may want to consider companies deeply involved in the AI and data center landscape. Here are two stocks that stand to benefit from these growth trends:
1. Applied Digital (NASDAQ: APLD)
Applied Digital is an emerging player in the data center space, boasting $221 million in revenue over the trailing twelve months and a market capitalization of $2.2 billion. Although its stock can be volatile, Applied Digital brings significant potential as a data center builder and operator with a focus on high-performance computing—making it well-suited to serve the expanding requirements of the AI industry.
Currently, the company operates data centers serving crypto mining clients, with 286 megawatts of capacity running at full utilization in North Dakota. Applied Digital is not yet profitable, but this is common for a business investing aggressively to capture future market share. Major growth is anticipated as new facilities become operational; a new campus in Ellendale, North Dakota, is set to open by late 2025, with two additional centers scheduled for the following two years.
A strategic partnership with Macquarie Asset Management is fueling this expansion, giving Applied Digital access to up to $5 billion for completing the Ellendale campus. This capital will enable the company to construct over 2 gigawatts of data center capacity, positioning it to meet the rising demand from AI workloads.
Additionally, Applied Digital is considering the sale of its cloud hosting division, which represents about one-third of its revenue. This move would allow the company to focus more intensively on its core data center business and potentially transition into a data center real estate investment trust (REIT) in the future.
Despite some operational risks common to smaller firms, Applied Digital’s revenue has increased by 22% year over year in the first quarter, and its significant growth initiatives suggest considerable long-term upside.
2. Dell Technologies (NYSE: DELL)
Dell Technologies may be best known for its PCs, but it is also the world’s leading supplier of servers. While PCs and peripherals currently compose the majority of Dell’s revenue, its infrastructure solutions—including servers optimized for AI—are rapidly catching up and could soon surpass the PC segment.
In the first quarter, Dell’s infrastructure solutions segment grew revenue by 12% year over year, now making up 44% of overall revenue. Servers and networking revenue climbed 16%, while operating income in the segment jumped 36%. These gains underscore a strong opportunity for expanding profit margins as demand for AI infrastructure accelerates.
Last quarter, orders for Dell’s AI servers hit $12 billion, outpacing all shipments from the prior fiscal year. The company’s backlog reached $14.4 billion, reflecting robust demand and a positive outlook for its infrastructure business.
Despite these strong results, Dell stock is still valued at a relatively low forward price-to-earnings (P/E) ratio of about 12.5—largely due to slower growth and competition in the PC market. Overall quarterly revenue grew 5% year over year, but strong margin improvements in the infrastructure segment produced a 17% jump in earnings per share.
As Dell’s infrastructure business continues to expand and comprise a larger share of total revenue, there is significant potential for the stock’s valuation to rise and deliver above-average returns for investors in the coming years.
This content is for informational purposes only and does not constitute financial advice.
