The rapid expansion of digital technologies and data-intensive applications, including artificial intelligence (AI), cloud computing, and enterprise digital transformation, is driving an unprecedented surge in demand for data centers and related services. In recent years, hyperscalers—large-scale cloud service providers (CSPs)—have been the primary force behind the growing need for AI-ready data centers due to the immense capacity required to support large foundational models.
A report published by McKinsey & Company in October 2024 projected that global data center capacity demand could increase annually by 19% to 22% between 2023 and 2030, reaching 171 to 219 gigawatts (GW). This represents a massive leap from the current demand of 60 GW. According to McKinsey, the industry would need to construct at least twice the total data center capacity built since 2000 in less than a quarter of the time to prevent a potential shortfall.
However, such tremendous growth won’t come without its own set of challenges. Power supply constraints are becoming a pressing concern. Stephen Byrd, Global Head of Sustainability Research at Morgan Stanley, discussed this issue in a CNBC interview, estimating that the U.S. could face a power deficit of 36 GW by 2028. To mitigate this, he highlighted the need for “de-bottlenecking solutions,” such as leveraging nuclear energy, converting cryptocurrency mining facilities, and deploying fuel cells to meet the soaring energy demands of data centers.
That said, there will be a shift in the power usage pattern as well. A January 2025 report from Boston Consulting Group (BCG) forecasts that hyperscalers will account for nearly 60% of the data center industry’s growth from 2023 to 2028, increasing their share of global power consumption from 35% to 45%. Meanwhile, enterprises that maintain their own on-premises data centers are expected to see their share decline from 10% to 5%, as companies continue migrating workloads to cloud and colocation providers. Colocation providers, which lease infrastructure and offer specialized cloud solutions, will account for the remaining 50% of power demand as hyperscalers increasingly rely on their services to scale operations efficiently.
Overall, the data center industry is undergoing a period of rapid expansion, with substantial investments and growth projected for years to come. While concerns over power consumption will remain a key focus, data centers have become essential to the digital economy, ensuring continued growth both domestically and in international markets.
With this in mind, let’s take a closer look at the 10 best-performing data center stocks in 2025.
An executive overviewing a data center full of servers and systems managing their technology solutions.
Our Methodology
To determine the 10 best-performing data center stocks in 2025, we conducted in-depth research to compile a list of U.S.-listed data center companies. Our process involved analyzing relevant exchange-traded funds (ETFs), research reports, and proprietary databases to identify key industry players. We then calculated the year-to-date (YTD) returns for all the identified companies and shortlisted the top 10 based on their performance. These companies were subsequently ranked in ascending order, with those generating the highest YTD returns placed at the top. Additionally, we also included data on hedge fund holdings in these companies as of Q4 2024 to provide further insight into investor interest.
Note: all pricing data is as of market close on February 21.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Performing Data Center Stocks So Far in 2025
10. Nutanix Inc. (NASDAQ:NTNX)
YTD Returns: 14.0%
Number of Hedge Fund Holders: 51
Nutanix Inc. (NASDAQ:NTNX) offers software-defined hyperconverged infrastructure (HCI) platforms, integrating computing, storage, networking, and virtualization into one comprehensive solution. This platform eases cloud complexities, enabling businesses to effortlessly manage applications and data across public and private clouds, data centers, on-premises, and edge environments.
Driven by secular growth trends in hybrid multicloud adoption, data center infrastructure modernization, and generative AI, Nutanix Inc. (NASDAQ:NTNX) benefits from its robust market position in the HCI sector. The company envisions a substantial and expanding market, with the total addressable market (TAM) projected at $76 billion by FY 2027. Approximately 50% of this TAM consists of the on-premise hyperconverged infrastructure market, with the next significant opportunity in database automation and database-as-a-service.
The stock has surged 14% in 2025 and outperformed the benchmark Philadelphia Semiconductor Index (SOX Index) by 11%. The stocks had shown a solid 28% increase in 2024. Despite this growth, consensus potential upside remains around 19%. On February 20, a Wells Fargo analyst reiterated a Hold rating on Nutanix Inc. (NASDAQ:NTNX) with a price target of $75. Previously, a Raymond James analyst reaffirmed a Buy rating on the shares, setting a price target of $76 in their report published on January 17.
9. Western Digital Corp. (NASDAQ:WDC)
YTD Returns: 15.2%
Number of Hedge Fund Holders: 85
Western Digital Corp. (NASDAQ:WDC) is a prominent developer and manufacturer of data storage devices and solutions. The company’s product range includes hard disk drives (HDDs), solid-state drives (SSDs), and external storage systems tailored for both consumer and enterprise markets. Western Digital’s storage solutions find applications in personal computing, data centers, and cloud storage services, meeting the increasing global demand for reliable and high-capacity data storage.
Western Digital Corp. (NASDAQ:WDC) has outperformed SOX Index by approximately 12.1% thus far in 2025, with YTD returns of 15.2%. During its Q2 2025 earnings call, management emphasized the company’s robust performance in the HDD sector, with data center revenue hitting an all-time high, driven by the advanced Ultra SMR technology. In Q3, while demand from data centers and mobile markets is expected to remain robust, bit shipments are projected to decline due to reduced demand in PC OEM and consumer end-markets. The first half of 2025 will be impacted by inventory adjustments, but a recovery is anticipated in the latter half, fueled by increased momentum in AI-driven PC ramps during the Windows refresh cycle.
A Citi analyst reaffirmed her Buy rating for the company with an $80 price target, citing the strong demand for high-capacity HDDs, constrained supply, and extended lead times. She also noted signs of stabilization in the NAND market, which could benefit Western Digital Corp. (NASDAQ:WDC)’s flash memory business. Furthermore, she believes that challenges like slower growth in consumer devices and inventory adjustments should ease in the coming months and coupled with expected growth in AI, should aid bit shipments growth.
