In this article, we will look at the 11 best data center stocks to buy now. If you want to skip our detailed analysis of the data center industry, you can go directly to the 5 Best Data Center Stocks to Buy Now.
Data Center companies worldwide posted record revenues in 2022, which reached $321.47 billion, according to a Statista analysis. The analysis anticipates the market to add more than $20 billion to the valuation by the end of this year. The 2022 performance is impressive, considering the global data center revenue was sub-$200 billion just two years ago.
According to a research by Allied Market Research, the data center market was worth $187.35 billion in 2020 and was expected to clock $517.17 billion by 2030. Interestingly, Statista’s analysis reaches a valuation close to Allied Market Research’s, positing that the global data centers market will generate approximately $410.40 billion in revenue by 2027. However, the former’s CAGR is significantly smaller, at 4.66%, compared to Allied Market Research’s 10.50%. The CAGR mismatch notwithstanding, there appears to be strong agreement that the data centers market has immense potential to break past the half trillion USD mark before the decade’s end.
The CAGRs that several analyses are quoting at which the data center services market will grow in a particular forecast period are incredible. For example, Allied Market Research quotes 10.50% between 2021 and 2030, while Mordor Intelligence’s figure is 13.69% between 2021 and 2026. In this light, a question arises: How will the market achieve an astronomical growth rate? In other words, what factors will drive the growth incredible growth?
For Mordor Intelligence, the growing demand for cloud services will carry much weight. The claim is perhaps in response to a Markets and Markets report, which established that the cloud computing market will expand at a 17% CAGR between 2022 and 2027, reaching $1,240.90 billion. Since data centers provide the critical infrastructure that keeps the cloud computing market running, any expansion that cloud computing posts naturally reaches data center services companies.
Besides cloud computing, increasing demand for e-commerce services will also spur growth in the data center services market. According to Statista, the revenue generated by e-commerce companies worldwide could reach $4.11 trillion at the end of this year. The organization makes a bolder claim that the market should be worth $6.35 trillion by 2027, thanks to an 11.51% CAGR. With the expansion of the e-commerce space comes the possibility of the data center services market’s growth potential blowing up. This is because e-commerce customers want more personalized data and better recommendations for what products to buy, which is made possible by services undergirded by data centers.
As the growth potential of the data center services market expands, the companies involved in this space have more room to grow revenues. Consequently, with stronger financials comes an increased likelihood for the stocks to climb higher. The corporations whose businesses undergird the data center services market include Microsoft Corporation (NASDAQ:MSFT), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Equinix Inc (NASDAQ:EQIX).
We scanned Insider Monkey’s database of 943 hedge funds and picked 11 data center stocks with the highest number of hedge fund investors.
Best Data Center Stocks to Buy Now
11. Cyxtera Technologies Inc (NASDAQ:CYXT)
Market cap as of March 27: $161.75 Million
Number of Hedge Fund Holders: 11
Cyxtera Technologies Inc (NASDAQ:CYXT) leads in data center colocation and interconnection services worldwide. It has more than 60 data centers in over 30 markets worldwide and is recognized as a leader in providing colocation and interconnection services.
According to Insider Monkey’s database, 11 hedge funds had a stake in Cyxtera Technologies Inc (NASDAQ:CYXT) as of Q4 2022. The total value of their holdings was $46.6 million.
Like Microsoft Corporation (NASDAQ:MSFT), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Equinix Inc (NASDAQ:EQIX), Cyxtera Technologies Inc (NASDAQ:CYXT) is one of the best data center stocks to buy now.
10. Iron Mountain Inc (NYSE:IRM)
Market cap as of March 27: $14.75 Billion
Number of Hedge Fund Holders: 21
Iron Mountain Inc (NYSE:IRM) is a company that offers data center and colocation services and is considered a top provider in this industry. Iron Mountain Inc (NYSE:IRM) has 21 data centers located across three continents, providing the necessary infrastructure and services for colocation and interconnection for its customers.
According to Insider Monkey’s data, Iron Mountain Inc (NYSE:IRM) was part of 21 hedge fund portfolios at the end of Q4 2022, compared to 23 in the earlier quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the company’s biggest stakeholder, with 535,256 shares worth $26.68 million.
9. Digital Realty Trust Inc (NYSE:DLR)
Market cap as of March 27: $28.02 Billion
Number of Hedge Fund Holders: 30
Digital Realty Trust Inc (NYSE:DLR) is a REIT that provides data center, colocation, and interconnection solutions to leading enterprises and service providers worldwide.
There were 30 hedge funds in our database that held stakes in Digital Realty Trust Inc (NYSE:DLR)’s at the end of the fourth quarter, compared to 29 funds in the third quarter. Balyasny Asset Management is the company’s most significant stakeholder, with 743,672 shares worth $74.57 million.
Baron Real Estate Income Fund, in its Q4 2022 investor letter, made the following comment about Digital Realty Trust, Inc. (NYSE:DLR):
“Recently, we re-acquired shares in Digital Realty Trust, Inc. (NYSE:DLR). We believe the company’s valuation is highly compelling following the 43% correction in its share price in 2022. We would note, however, that we are closely monitoring the company because business execution and quarterly results have disappointed at various points in the last few years. We have limited the Fund’s exposure to the company with this in mind.”
8. Equinix Inc (NASDAQ:EQIX)
Market cap as of March 27: $63.94 Billion
Number of Hedge Fund Holders: 38
Equinix Inc (NASDAQ:EQIX) is an American multinational company specializing in internet connection and data centers and is ranked 8th on the list of the best data center stocks to buy. EQIX provides businesses with access to important locations, partners, and opportunities to quickly and effectively expand their digital services, enhance customer experiences, and increase their overall value.
Deutsche Bank analyst Matthew Niknam raised Equinix Inc (NASDAQ:EQIX)’s price target to $760 from $725 and retained a ‘Buy’ rating on the shares on February 22.
According to Insider Monkey’s Q4 data, 38 hedge funds were long Equinix Inc (NASDAQ: EQIX), compared to 39 funds in the prior quarter. Ian Simm’s Impax Asset Management is the biggest position holder in Equinix Inc (NASDAQ:EQIX), with approximately 659,094 shares worth $431.3 million.
“Real estate holdingsEquinix, Inc.(NASDAQ:EQIX) and Prologis (PLD) were standouts in a sector challenged by materially higher interest rates. Equinix is a best-in-class data center REIT with record leasing and backlog and a conservative balance sheet that should position it well in a downturn. Logistics real estate, meanwhile, has some of the most attractive market dynamics of all real estate subsectors, and Prologis is a clear leader within the group. Logistics real estate should continue to benefit from secular tailwinds of rising e-commerce penetration, ever faster delivery times, and supply chain resiliency (“just in case”).”
7. International Business Machines Corporation (NYSE:IBM)
Market Cap as of March 27: $112.3 Billion
Number of Hedge Fund Holders: 43
International Business Machines Corporation (NYSE:IBM) is a global company that offers integrated solutions and services through its subsidiaries. International Business Machines Corporation (NYSE:IBM) has a long history in computer technology and has been involved in hardware, software, middleware, and consulting services across generations.
International Business Machines Corporation (NYSE:IBM) was in 43 hedge funds’ portfolios at the end of the fourth quarter of 2022. There were 40 hedge funds in our database, with IBM holdings at the end of the previous quarter.
6. American Tower Corp (NYSE:AMT)
Market cap as of March 27: $90.18 Billion
Number of Hedge Fund Holders: 61
American Tower Corp (NYSE:AMT) is a global REIT that owns, operates, and develops communication sites. American Tower Corp (NYSE:AMT) has expanded its reach in the cloud computing and digital infrastructure sectors by acquiring companies that own and operate data centers. In 2021, it acquired Coresite in a $10 billion deal, which helped the REIT diversify and gain exposure to the high-demand data industry. It is also considered one of the best data center stocks to buy now.
American Tower Corp (NYSE:AMT) owns 6 edge sites and 2 metro facilities in the US as a part of their data center portfolio, which includes CoreSite and Datasite. CoreSite operates in 8 markets and has 25 facilities.
American Tower Corp (NYSE:AMT) has a history of consistently increasing its dividend payouts. It has increased its dividend every quarter for the past 10 years. Most recently, AMT announced a quarterly cash distribution of $1.56 per share payable to stockholders of record on April 14, 2023. AMT has a ‘Strong Buy’ consensus rating with 12 buy ratings, 2 hold ratings, and 0 sell ratings.
At the close of the fourth quarter of 2022, 61 hedge funds held stakes in American Tower Corp (NYSE:AMT). These funds disclosed collective positions worth $3.38 billion in the company, down from $3.36 billion in the previous quarter with 62 positions. As of December 31, Akre Capital Management is the largest stockholder in the company and holds a position worth $1.48 billion.
Along with Microsoft Corporation (NASDAQ:MSFT), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Equinix Inc (NASDAQ:EQIX), American Tower Corp (NYSE:AMT) is one of the best data center stocks to buy now.
“Real estate and communication services sectors generated positive returns but lagged others within the Russell 1000 Value Index. The Strategy benefited from its underweight in the real estate sector withAmerican Tower Corporation(NYSE:AMT) as its only holding. REITs are generally perceived to be interest rate sensitive, which negatively impacted American Tower’s recent stock performance. However, we remain confident in the company’s highly durable and predictable business model, which is supported by long-term customer contracts and insatiable wireless data growth.”
Click to continue reading and see 5 Best Data Center Stocks to Buy Now.
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Disclosure: None.11 Best Data Center Stocks to Buy Now is originally published on Insider Monkey.
Data center REITs own and manage facilities that customers use to safely store data. Data center REITs offer a range of products and services to help keep servers and data safe, including providing uninterruptable power supplies, air-cooled chillers and physical security.What are the risks of investing in data centers? ›
As with other niche property types, data center investing includes some unique risks, such as availability of power, supply chain delays, and natural disasters.How do data centers make money? ›
Data centers located next to robust fiber optic and power infrastructure, large population centers and in business-friendly states are most attractive to customers. How do data centers make money? Data center operators make money by leasing or licensing power and space.What are the top 10 stocks to buy right now? ›
- ServiceNow, Inc. (NYSE: NOW)
- Alphabet Inc. (NASDAQ: GOOG)
- Amazon.com, Inc. (NASDAQ: AMZN)
- The Walt Disney Company (NYSE: DIS)
- Palo Alto Networks, Inc. (NASDAQ: PANW)
- The Boeing Company (NYSE: BA)
- Prologis, Inc. (NYSE: PLD)
- Johnson & Johnson (NYSE: JNJ)
|MRVL||Marvell Technology, Inc.||65.51|
|#||Data Center Company||Geography|
|1||Amazon Web Services (AWS)||Global|
|3||Google Cloud Platform (GCP)||Global|
|4||Meta Platforms (Facebook)||North America, Europe|
Direct real estate offers more tax breaks than REIT investments, and gives investors more control over decision making. Many REITs are publicly traded on exchanges, so they're easier to buy and sell than traditional real estate.Can you invest in data centers? ›
Private investors have snapped up data centers in recent years, but plenty of other potential investment opportunities in the sector's value chain may be going unnoticed.What is the biggest problem for data centers? ›
#1: Power Efficiency and Sustainability
The first challenge for data centers is power efficiency and sustainability. Servers and devices demand electricity, but the incorrect distribution of energy may result in power outages.
Risk management and protecting the data stored and transmitted over the network are the primary concerns of every data center administrator.What are cap rates for data centers? ›
Total data center asset sales remained on par with recent years, ending 2021 just shy of $5 billion. Data center capitalization rates remained relatively unchanged for the year, with select trades in the mid-to-high-3% range for core product.What is the forecast for data centers in 2030? ›
Chicago, May 04, 2023 (GLOBE NEWSWIRE) -- The Modular Data Center Market size is expected to grow from USD 23.0 billion in 2022 to USD 88.5 billion by 2030 at a Compound Annual Growth Rate (CAGR) of 18.4% during the forecast period, according to a new report by MarketsandMarkets™.How many data centers are there in the US? ›
In the United States, there are over 2,500 data centers.What is the demand for data centers in the US? ›
High demand and low inventory (available space) have resulted in a vacancy rate in major North American markets of just 2.88%, according to datacenterHawk's 1Q 2023 Data Center Market Recap. In the secondary markets, it's 5%.What stock will grow the most in 2023? ›
- Bank of America's Best Growth Stocks of 2023.
- Amazon (AMZN)
- Constellation Energy (CEG)
- Chipotle Mexican Grill (CMG)
- Alphabet (GOOG, GOOGL)
- Eli Lilly (LLY)
- Match (MTCH)
- Progressive (PGR)
|S.No.||Top 5 Shares to Buy Today|
|2.||Tata Consultancy Services|
|Company and ticker symbol||Performance in 2023|
|Meta Platforms (META)||120.0%|
|Advanced Micro Devices (AMD)||82.5%|
- Coca-Cola. (NASDAQ: KO) ...
- Altria. (NASDAQ: MO) ...
- Amazon.com. (NASDAQ: AMZN) ...
- Celgene. (NASDAQ: CELG) ...
- Apple. (NASDAQ: AAPL) ...
- Alphabet. (NASDAQ:GOOG) ...
- Gilead Sciences. (NASDAQ: GILD) ...
- Microsoft. (NASDAQ: MSFT)
In addition to Amgen, Inc. (NASDAQ:AMGN), other Fast Money stocks that are widely held by elite hedge funds include Tesla, Inc. (NASDAQ:TSLA), UnitedHealth Group Inc. (NYSE:UNH), and Microsoft Corporation (NASDAQ:MSFT).
- McDonald's Corporation (NYSE:MCD) Number of Hedge Fund Holders: 57. ...
- The Coca-Cola Company (NYSE:KO) Number of Hedge Fund Holders: 58. ...
- NextEra Energy, Inc. (NYSE:NEE) ...
- Walmart Inc. (NYSE:WMT) ...
- Costco Wholesale Corporation (NASDAQ:COST) Number of Hedge Fund Holders: 66.
Bangladesh has 7th largest data centre in the world: Here's how it can earn foreign currency. Located in Bangabandhu Hi-Tech City, Kaliakoir, Joydebpur, the National Data Centre has recently shown potential to be a big source of foreign investment.What is the largest single data center? ›
The Inner Mongolia Information Park is the world's largest data center, with 10,763,910 (10.7 million) square feet, and sits on the Beijin-Tianjin economic circle radiation belt.Which is the world's 1st largest data center? ›
The largest data center in the Baltics. Photo by: Tõnu Tunnel. According to the Internet, the world's largest data center in the world is the China Telecom-Inner Mongolia Information Park, founded by a Chinese-state owned communications company.What are the top 5 largest REIT? ›
The five largest REITs in the United States in 2021 are: American Tower Corporation, Prologis, Crown Castle International, Simon Property Group and Weyerhaeuser.What is the highest paying REIT? ›
|REIT (Ticker)||Specialty||Forward Dividend Yield|
|Two Harbors Investment (TWO)||Residential mortgage-backed securities||14.1%|
|MFA Financial (MFA)||Residential mortgage assets||12.6%|
|Chimera Investment (CIM)||Mortgage assets||13.5%|
|Data source: Morningstar. As of February 16, 2023|
Summary of Why Investors May Not Want to Invest in REITs
But, REITs are not risk free. They may have highly variable returns, are sensitive to changes in interest rates, have income tax implications, may not be liquid, and fees can impact total returns.
Apple has its own data centers, dedicated to meeting the company's varying performance, privacy, regulatory, and security requirements.Does Google own data center? ›
Google owns and operates data centers all over the world, helping to keep the internet humming 24/7. Learn how our relentless focus on innovation has made our data centers some of the most high-performing, secure, reliable, and efficient data centers in the world.Do data centers increase property value? ›
The value of data center real estate increased by $6.6 billion, or 56%, last year, and data centers' share of all real estate value in the county increased by 3.4%. Data center properties now account for $18.4 billion in fair-market value.
Many organizations want to simplify or scale down their data centers -- but they won't disappear. Admins can examine as-a-service options and cloud to offload some applications. Gartner has predicted that, by 2025, 85% of enterprises will shut down their traditional data centers.What happens when data centers go down? ›
What happens if a data center goes down? A power outage on the data center may be an IT specialist's worst nightmare. It generally implies downtime, loss of revenue, extra expenditures, and a lot of stress and scrambling until the problem is fixed.What is Tier 4 data center? ›
Tier 4: A Tier 4 data center is built to be completely fault tolerant and has redundancy for every component. It has an expected uptime of 99.995% (26.3 minutes of downtime annually).What are the 5 elements of data center? ›
- Power. Data centers use more power than some developed nations do. ...
- Cooling. Servers and other equipment in data centers generate a lot of heat. ...
- Security. ...
- Scalability. ...
- Location. ...
- Get It Right!
Tier 3: A Tier 3 data center has multiple paths for power and cooling and systems in place to update and maintain it without taking it offline. It has an expected uptime of 99.982% (1.6 hours of downtime annually).What is the gold standard for data center? ›
ISO27001 certification is an excellent standard that should serve as the model for all organizations and businesses entrusted with storing data.How much does data center down time cost? ›
At an average per-event cost of just over $500,000 (including direct costs, indirect costs and opportunity costs), a typical enterprise data center can incur more than $5 million in downtime costs during this time.How much does the largest data center cost? ›
At a cost of $3 billion, the largest data center in the world by square footage doesn't come cheap. Owned by China Telecom, the facility is located in Hohhot, China, as part of the Mongolia Information Park. With total square footage of 10,763,910, Mongolia Information Park is a truly enormous property.What is the difference between BDC and REITs? ›
Is a non-traded BDC similar to a non-traded Real Estate Investment Trust (REIT)? A BDC is a pooled investment vehicle that invests in equity or debt of private companies just as a REIT invests in real estate. A REIT and a BDC have no material differences with the exception of the underlying assets in which they invest.What is digital realty REIT? ›
Investor Relations. Digital Realty owns, acquires, develops and operates data centres. The company is focused on providing data centre, colocation and interconnection solutions for domestic and international customers. Investor Relations.
Mortgage REITs, or mREITs, are investments in purchased or originated mortgages and mortgage-backed securities (MBS) that earn income from the interest paid on those assets. mREITs are essential in providing liquidity in the real estate market.What is the 90% REIT rule? ›
One of the annual requirements is that a REIT must distribute 90 percent of taxable income to its investors each year. If a REIT does not meet this distribution requirement, its status as a REIT could be jeopardized and taxes imposed on its undistributed taxable income.What is the most traded REIT? ›
|Top REIT ETFs||Ticker Symbol||Assets Under Management (AUM)|
|Vanguard Real Estate ETF||(NYSEMKT:VNQ)||$84.7 billion|
|iShares U.S. Real Estate ETF||(NYSEMKT:IYR)||$5.6 billion|
|Schwab U.S. REIT ETF||(NYSEMKT:SCHH)||$7.3 billion|
|Real Estate Select SPDR Fund||(NYSEMKT:XLRE)||$5.3 billion|
The economy continues to be strong, but rates are cyclically high. While property values and REIT prices have been declining, 2023 should see the beginning of a rebound, especially in the public markets, which tend to be a forward indicator.Which BDC is the best? ›
- BDC #5: Gladstone Capital (GLAD)
- BDC #4: Goldman Sachs BDC Inc. ( GSBD)
- BDC #3: TriplePoint Venture Growth BDC (TPVG)
- BDC #2: Capital Southwest Corp. ( CSWC)
- BDC #1: Great Elm Capital Corp. (
A BDC may make investments with greater risk of volatility and loss of principal than other investment options and may also be highly speculative and aggressive. Certain BDCs may also be difficult to value since many of the assets of BDCs do not have readily ascertainable market values.What is the largest BDC stock? ›
Digital Realty Trust serves a vast customer base of over 4,000 customers, which is diversified across multiple industries from Social Media to IT, Finance and Telecoms. Its largest customers include giants such as; Facebook, Oracle, Verizon, IBM, JPMorgan, LinkedIn, AT&T and many more.What is the old name for digital realty? ›
It was founded in 1991 as Amnesty Design, and started to work on their upcoming title, Reunion, which would be released in 1994 by Grandslam Video, for Amiga and MS-DOS. In 1997, leading up to the release of Imperium Galactica, the company changed its name to Digital Reality.Who owns Digital Realty data center? ›
Digital Realty Sells 43915 Devin Shafron Dr in Ashburn, Virginia. On March 3, 2023, Digital Realty, through the entity Nova DC Fee Owner, L.P., sold its data center at 43915 Devin Shafron Drive in Ashburn, Virginia to GI Partners, a private equity firm, and more precisely, the entity GI TC Devin Shafron LLC.
For investors, mortgage-backed securities have some advantages over other securities. They pay a fixed interest rate that is usually higher than U.S. government bonds. Moreover, they typically offer monthly payouts, whereas bonds offer a single lump-sum payout at maturity.How do REITs compare to S&P 500? ›
From calendar year 2016 to 2022, the S&P 500 Trust has dramatically outperformed the Vanguard Real Estate Index Fund. Over that seven-year stretch, the total return of the SPY was 106% or a 10.8% CAGR, whereas the VNQ total return was only 33% or a 4.2% CAGR.Can individual investors buy MBS? ›
The principal and interest payments the mortgage borrowers pay to the bank are “passed through” to MBS investors each month. Investors can purchase individual MBS securities, or mutual funds comprised of MBS holdings from firms like BlackRock.