In an AI-driven world, data centers have become more critical than ever. While many people have heard of data centers, few fully understand what they entail. Simply put, a data center is a physical facility that houses an organization’s digital infrastructure, including servers, storage systems, and networking equipment. These facilities provide the computing power necessary for IT systems to function, serving as the backbone of modern digital infrastructure. They are essential to powering cloud computing, AI applications, and enterprise IT services.
With the rapid expansion of AI and high-performance computing, data centers have experienced exponential growth, a trend expected to continue for years. According to a February 5 report by the Dell’Oro Group, global annual data center capital expenditure (capex) is projected to exceed $1 trillion by 2029. Despite ongoing concerns about high power consumption, investment in AI infrastructure remains on a strong upward trajectory. Baron Fung, Senior Research Director at Dell’Oro Group, emphasizes this point:
“While AI spending has yet to yield the expected returns and efficiency improvements, long-term growth remains assured, driven by hyperscalers’ multi-year capex cycles and government initiatives such as the $500 billion Stargate Project. Although recent advancements in AI model training efficiency from DeepSeek have been disruptive, efforts to enhance efficiency and reduce the total cost of ownership in AI data centers have been underway for some time. Key areas of focus include advancements in accelerated computing through GPUs and custom accelerators, large language model (LLM) optimizations, and next-generation rack-scale and network infrastructure—all essential for enabling sustainable growth from both cost and power perspectives.”
A key challenge facing the industry was highlighted in KPMG’s “Data Center Supply Chain” report published in November 2024. The report warns of the sector’s heavy reliance on a small group of suppliers and contractors, which, despite improvements in procurement and operations, poses risks to capacity expansion, costs, innovation, and resilience—especially as demand accelerates. KPMG cautions that failure to address these vulnerabilities could destabilize the ecosystem. To mitigate these risks, the report recommends diversifying the supply chain by encouraging new market entrants and reducing dependence on a handful of general, mechanical, and electrical subcontractors.
In summary, while the data center industry is fundamental to technological progress, it is still evolving and adapting to shifting economic and demand dynamics. There is enough scope for more players to offer new and innovative solutions to support the technological advancements. The surging demand for data center facilities has attracted substantial investments from private equity and infrastructure funds, reinforcing expectations of resilient long-term growth. As a result, the data center sector remains a highly attractive space for investors.
With that in mind, let’s explore the 10 most oversold data center stocks to buy according to analysts.
A panoramic aerial view of a modern data center with high-performance computing.
Our Methodology
To determine the 10 most year-to-date (YTD) oversold data center stocks to Buy, 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 YTD returns for all identified companies and shortlisted the 10 worst-performing stocks. These were then ranked based on their potential upside, with the highest-upside stock 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 24.
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 Most Oversold Data Center Stocks to Buy According to Analysts
10. Lumen Technologies Inc. (NYSE:LUMN)
YTD returns: -18%
Potential Upside: 15%
Number of Hedge Fund Holders: 44
Lumen Technologies Inc. (NYSE:LUMN) is a telecommunications and network services company specializing in fiber-optic infrastructure, edge computing, and cloud connectivity solutions. Leveraging an extensive global fiber network, Lumen provides enterprise clients, government entities, and hyperscale cloud providers with high-bandwidth, low-latency connectivity. The company’s robust fiber backbone and edge computing capabilities play a critical role in data center interconnectivity, facilitating seamless data transfer between cloud platforms and corporate users.
Lumen Technologies Inc. (NYSE:LUMN) has experienced an 18% decline in its share price year-to-date. On January 27, the stock plummeted by 16% following the emergence of DeepSeek, a Chinese GenAI model, which triggered a widespread sell-off in AI and data center-related stocks, including Nvidia Corp. (NASDAQ:NVDA). Despite delivering an impressive 190% return in 2024, driven by partnerships with Microsoft, investor sentiment has turned more cautious in 2025. In addition to the broader market impact of the DeepSeek-driven downturn, unverified reports have suggested that Microsoft may be scaling back investments in AI infrastructure and data centers, raising concerns about the future outlook for Lumen Technologies Inc. (NYSE:LUMN).
Given these uncertainties, analysts are currently adopting a cautious stance on the stock, awaiting further clarity on the investment environment. Lumen Technologies Inc. (NYSE:LUMN) has a consensus potential upside of 15.5%, placing it at the lower end of our ranked list.
9. Advanced Micro Devices Inc. (NASDAQ:AMD)
YTD returns: -11%
Potential Upside: 30%
Number of Hedge Fund Holders: 96
Advanced Micro Devices Inc. (NASDAQ:AMD) is a semiconductor company that designs and manufactures high-performance computing and graphics solutions. Its product portfolio includes microprocessors, graphics processors, and system-on-chip (SoC) solutions for various applications, including data centers, gaming, and embedded systems. It has gained significant market share in the CPU and GPU markets and competes directly with Intel Corp. (NASDAQ:INTC) and NVIDIA Corp. (NASDAQ:NVDA).
Advanced Micro Devices Inc. (NASDAQ:AMD) has underperformed in both 2024 and 2025. After declining 18% in 2024, the stock has fallen an additional 11% so far in 2025. While the company has gained CPU market share in recent years, its growth in the AI sector has been comparatively slower, with weaker adoption of its advanced GPU products. As a result, AMD is often perceived as lagging behind competitors, particularly Nvidia.
Despite this, AMD continues to benefit from the expansion of the data center market. In its Q4 2024 earnings report released on February 4, the company posted a 69% year-over-year increase in data center revenue, fueled by strong demand for AMD Instinct GPUs—designed for AI and high-performance computing—and AMD EPYC CPUs. While AMD is working to enhance its AI software ecosystem through its ROCm open AI stack and strategic partnerships with hyperscalers, it has yet to pose a significant competitive threat to Nvidia.
The majority of analyst ratings remain positive on Advanced Micro Devices Inc. (NASDAQ:AMD), with market consensus indicating a strong 30% potential upside.
8. COPT Defense Properties (NYSE:CDP)
YTD returns: -14%
Potential Upside: 31%
Number of Hedge Fund Holders: 23
COPT Defense Properties (NYSE:CDP) is a real estate investment trust (REIT) focused on mission-critical facilities leased to the U.S. government and defense contractors. The company owns, develops, and manages high-security office and data center properties that support military, intelligence, and national security operations.
In 2025, shares of COPT Defense Properties (NYSE:CDP) have declined by 14%, largely due to broader volatility in the data center and AI-related sectors. In its Q4 2024 earnings report released on February 6, the company posted a 5% year-over-year increase in adjusted funds from operations per share (FFOPS), reaching $0.65. As of December 2024, its total portfolio spanned 24.5 million square feet (sq. ft.) with an occupancy rate of 93.6%, including a 95.6% occupancy rate for its 22.4 million sq. ft. Defense/IT Portfolio. Additionally, its full-year 2024 tenant retention rate remained strong at 86%. COPT Defense Properties continues to expand in key defense hubs while developing secure data center properties to meet the growing demand for national security and cybersecurity infrastructure.
Following its earnings release, Evercore ISI analyst Steve Sakwa reaffirmed his Buy rating on February 7, setting a price target of $37, which implies a 38% upside—moderately above the consensus upside of 31%.
7. Marvell Technology Inc. (NASDAQ:MRVL)
YTD returns: -11%
Potential Upside: 33%
Number of Hedge Fund Holders: 105
Marvell Technology Inc. (NASDAQ:MRVL) is a leading provider of semiconductor solutions for data infrastructure, serving diverse end markets, including data centers, enterprise networking, carrier infrastructure, consumer applications, and the automotive and industrial sectors. Its product lineup features custom Application-Specific Integrated Circuits (ASICs), electro-optics, Ethernet solutions, Fibre Channel adapters, processors, and storage controllers.
Marvell Technology Inc. (NASDAQ:MRVL) has been experiencing strong growth, fueled by rising demand for data infrastructure solutions, the rapid adoption of AI and machine learning, and the continued expansion of cloud computing. In Q3, the company’s data center revenue surged 98% YoY and 25% sequentially, with management projecting more than 20% sequential growth for Q4. Following the company’s robust Q3 2025 earnings, Chairman and CEO Matt Murphy attributed its strong performance to the full-scale production of custom AI silicon programs, as well as sustained demand for its advanced interconnect products from cloud customers. Marvell estimates that the total addressable market for accelerated computing in data centers will reach $202 billion by 2028, expanding at a 24% compound annual growth rate (CAGR) from 2023.
Despite its growth trajectory, Marvell Technology Inc. (NASDAQ:MRVL) shares have declined 11% year-to-date due to broader semiconductor market volatility, underperforming the benchmark SOX Index, which has gained 0.5% over the same period. This decline follows an impressive 83% rally in 2024. Analysts remain optimistic about the stock, with 90% assigning a Buy rating and an average potential upside of 33%. On February 23, Oppenheimer analyst Rick Schafer reaffirmed his Buy rating, maintaining a price target of $125.
6. Arista Networks Inc (NYSE:ANET)
YTD returns: -16%
Potential Upside: 35%
Number of Hedge Fund Holders: 78
Arista Networks Inc. (NYSE:ANET) specializes in data-driven, client-to-cloud networking solutions for large-scale AI, data center, campus, and routing environments. The company’s core offerings include its Extensible Operating System (EOS), ultra-low latency Ethernet switches, routers, and software-defined networking solutions, which are widely utilized by hyperscale cloud providers, financial institutions, and telecommunications companies.
Year-to-date, Arista Networks Inc. (NYSE:ANET) shares have declined 16%, with the sharpest drop occurring after January 24, when the emergence of the Chinese GenAI model DeepSeek caused significant disruption in the technology sector. Despite the stock’s muted performance, Arista remains a key player in the data center industry. Its data-driven cloud networking platforms allow data center networks to scale efficiently, supporting hundreds of thousands of physical servers and millions of virtual machines with minimal switching tiers. With the continued rise of AI adoption, the company is experiencing strong demand for its high-speed Ethernet networking solutions, particularly for large-scale data center deployments.
5. Iron Mountain Inc. (NYSE:IRM)
YTD returns: -13%
Potential Upside: 39%
Number of Hedge Fund Holders: 40
Iron Mountain Inc. (NYSE:IRM) specializes in storage and information management services, with a growing footprint in the data center sector. Expanding beyond its legacy businesses of document storage and records management, the company has made significant strides in digital infrastructure, offering colocation, hyperscale data centers, and secure cloud services.
Year-to-date, Iron Mountain Inc. (NYSE:IRM) shares have declined 13%, though there has been no company-specific catalyst behind the drop aside from the Q4 2024 earnings report released on February 13, which could have led to a 7% decline in the stock. The company posted strong results, reporting 11% year-over-year revenue growth and a 15% increase in adjusted EBITDA. Management also provided an optimistic outlook for FY 2025, forecasting approximately 9% revenue growth. Additionally, they highlighted that the company’s high-growth segments—including digital solutions, data centers, and asset lifecycle management—are collectively expanding at a compound annual growth rate (CAGR) exceeding 20% and are becoming an increasingly significant portion of total revenue.
Over the years, Iron Mountain has scaled its global data center operations through a combination of acquisitions and organic growth. As of December 2024, the company operates 29 data centers across 21 global markets, either directly or through joint ventures, with a total capacity of 416 megawatts (MW). By owning and operating both land and facilities, Iron Mountain has the potential to scale up to 1,280 MW, positioning itself well to meet future data center demand.
4. Credo Technology Group Holding Ltd. (NASDAQ:CRDO)
YTD returns: -10%
Potential Upside: 39%
Number of Hedge Fund Holders: 43
Credo Technology Group Holding Ltd. (NASDAQ:CRDO) is a provider of advanced connectivity solutions for high-performance data centers, telecommunications, and cloud infrastructure. The company specializes in semiconductor-based solutions that address the increasing demand for high-speed data transmission, with a focus on silicon interconnects. It sells its products to hyperscalers, original equipment manufacturers (OEMs), original design manufacturers (ODMs) and optical module manufacturers, as well as to companies in the enterprise and HPC markets.
Credo Technology Group Holding Ltd. (NASDAQ:CRDO) shares have declined approximately 10% in 2025, though this appears to be a case of profit-taking following the stock’s impressive 245% rally in 2024. During the DeepSeek-driven market sell-off, the stock dropped 30% but later managed to recover a portion of those losses, mirroring the trend seen across many AI-related stocks.
According to Business Insider, Mizuho Securities analyst Vijay Rakesh reaffirmed his Buy rating on the stock in a February 13 update, maintaining a price target of $90. Earlier, on January 8, Stifel analyst Tore Svanberg also reiterated a Buy rating and raised his price target from $80 to $85. Analyst sentiment remains bullish on Credo Technology Group Holding Ltd. (NASDAQ:CRDO), with a consensus view suggesting a potential upside of approximately 40%.
3. Coherent Corp. (NYSE:COHR)
YTD returns: -15%
Potential Upside: 50%
Number of Hedge Fund Holders: 71
Coherent Corp. (NYSE:COHR) specializes in the development and manufacturing of engineered materials, networking products, optoelectronic components, and optical and laser systems for various industries, including industrial, communications, electronics, and instrumentation. The company maintains a strong foothold in the optical communications market, particularly with its advanced solutions for data centers, such as datacom optical transceivers.
Following a remarkable 118% surge in share price in 2024, Coherent Corp. (NYSE:COHR) has faced a more cautious start to 2025, with shares declining 15% year-to-date. On February 5, the company reported Q2 2025 revenue of $1.43 billion, reflecting a 27% year-over-year increase and a 6% sequential rise, fueled by AI-driven growth in datacom, telecom, and industrial segments. Profitability also saw significant improvement, with gross margin expanding by 363 basis points to 38.2%, and earnings per share (EPS) soaring to $0.95—more than tripling year-over-year.
Following the earnings release, analysts at Bank of America raised their price target on Coherent Corp. (NYSE:COHR) from $120 to $125 while reaffirming their Buy rating. They anticipate continued growth in the company’s AI optics portfolio, as demand in the transceiver market remains stronger than supply.
2. Vertiv Holdings Co. (NYSE:VRT)
YTD returns: -20%
Potential Upside: 55%
Number of Hedge Fund Holders: 92
Vertiv Holdings Co. (NYSE:VRT) is engaged in the design, manufacturing, and servicing of critical digital infrastructure for data centers, communication networks, and commercial and industrial environments. The company specializes in thermal management, power distribution, and backup power systems, ensuring high efficiency and reliability in mission-critical operations.
In a February 23 update, Evercore ISI analyst Amit Daryanani reaffirmed his Buy rating on Vertiv Holdings Co. (NYSE:VRT), maintaining his price target at $150. In his earlier January report, he highlighted the company’s ongoing development of a proprietary refrigerant technology for two-phase cooling, a method designed to improve heat transfer efficiency. While still in the customer testing phase, this innovation has the potential to become a significant growth driver for the company. Backed by strong customer relationships, continuous technological advancements, and a comprehensive product portfolio, Vertiv is well-positioned to navigate the evolving landscape of the data center cooling market, as per the analyst.
After soaring 137% in 2024, the stock has declined by 20% in 2025 so far. However, market consensus still indicates a potential upside of 55%.
1. Semtech Corp. (NASDAQ:SMTC)
YTD returns: -41%
Potential Upside: 85%
Number of Hedge Fund Holders: 57
Semtech Corporation (NASDAQ:SMTC) is a semiconductor company specializing in the design and manufacturing of high-performance analog and mixed-signal chips for data centers, IoT, and communications infrastructure. Its product portfolio includes optical networking chips, signal integrity solutions, and power management ICs, all aimed at enhancing data center efficiency and enabling high-speed connectivity.
After surging 182% in 2024, Semtech Corporation (NASDAQ:SMTC) has seen its stock decline by approximately 41% in 2025. The most significant drop occurred on Monday, February 10, when shares plummeted 43% following the company’s downward revision of its guidance for CopperEdge products. Previously, Semtech had projected net sales of at least $50 million from its CopperEdge solutions used in active copper cables but revised expectations downward due to changes in rack architecture by a major customer.
According to a MarketWatch report citing Benchmark analyst Cody Acree, that customer is believed to be Nvidia Corp. (NASDAQ:NVDA), which may be scaling back support for a particular server rack configuration amid the development of a new processing unit designed to address heating concerns. Despite the sharp stock decline, the analyst maintained a Buy rating, viewing the sell-off as an overreaction and considering ample opportunities in rest of the portfolio.
Several analysts continue to hold a favorable outlook on Semtech despite the Nvidia-related setback. B. Riley analyst Craig Ellis reaffirmed his Buy rating with a $68 price target, while Craig Hallum analyst Anthony Stoss also maintained a Buy rating, setting a target of $70. Market consensus still suggests a potential upside of 85%.
While we acknowledge the potential of SMTC to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SMTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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