The rise of artificial intelligence (AI) is driving significant growth in the data center market. Analysts predict that the demand for data center capacity to support AI workloads will increase significantly due to factors like growing computing power requirements. The need to process large amounts of data and the growing adoption of AI applications across various industries should accelerate the growth.
Likewise, Fortune Business Insights expects the data center market to grow at a Compound Annual Growth Rate (CAGR) of 25.7% between 2024 and 2032. The growth comes as companies and nations prepare a massive capital deployment of $1.8 trillion from 2024 to 2030 to meet the growing demand for computing power worldwide.
The US is one of the countries spearheading the data center investment spree. As part of the Stargate project, the US is poised to play host to a $500 billion investment into data centers, which is expected to bolster the country’s computing capacity to boost AI development. The first $100 billion investment is expected to come up this year.
The Stargate project is expected to give the US a strategic advantage and create thousands of jobs.
“As for the 100,000 jobs the project is supposed to create? Some construction jobs will be created as the data centers are built, but many more (millions more) will be created as the data centers come online. We’ve never had a compute cloud like this—there’s literally no way to calculate the economic impact of this amount of AI compute. It will be massive,” said Shelly Palmer, a tech pundit and consultant,
Amid the investment spree, there are growing concerns over a potential oversupply of data center capacity despite the ever-growing needs as part of the AI boom. Reports that Microsoft is canceling leases for US data center capacity are raising concerns about whether tech giants have secured more AI computing capacity than they needed. The software giant has already canceled data center leases totaling hundreds of megawatts, signaling it could have more capacity in its pipeline than it needs.
According to the Kyndryl AI Readiness Report, 86% of leaders are confident in their AI implementation, but 36% cite ROI as a barrier to adoption. Data centers, the core of the digital economy, support various demanding workloads, emphasizing the need for low-latency, high-bandwidth environments for AI applications. The time to invest is now.
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For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds in Q4 2024.
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11. Koninklijke Philips N.V. (NYSE:PHG)
Number of Hedge Fund Holders: 12
Koninklijke Philips N.V. (NYSE:PHG) is a technology company that focuses on improving health and well-being through innovation. It offers a cloud-based AI solution that helps radiology departments access an ecosystem of AI applications from multiple vendors. The company announced the expansion of its cloud-based radiology informatics solution to Europe on February 27, following its deployment at 150 sites in North and Latin America.
Philips HealthSuite Imaging, a cloud-based solution for radiology departments managed by Philips and hosted on AWS, ensures data security with regular upgrades, security patches, and compliance checks. This SaaS model allows clinicians to access the latest innovations from any location. Its launch comes when 95% of healthcare providers plan to migrate over half of their applications to the cloud. Integration of generative AI capabilities, especially conversational reporting tools that use Amazon Bedrock’s foundation models, solves two major market issues: workflow inefficiencies and radiologist shortages. Therefore, the solution should enhance collaboration, accelerate clinical decision-making, and improve operational efficiency.
“The availability of Philips’ cloud-based radiology solutions in Europe will be a game changer for healthcare providers, helping them to manage staff shortages, optimize workflows and drive better outcomes”, said Shez Partovi, Business Leader Enterprise Informatics at Philips.
10. Vuzix Corporation (NASDAQ:VUZI)
Number of Hedge Fund Holders: 13
Vuzix Corporation (NASDAQ:VUZI) is a consumer electronics company that designs, manufactures, and markets smart glasses and augmented reality (AR) technologies. It also integrates artificial intelligence technology in its products for the enterprise, medical, defence, and consumer markets. The company joined forces with TranscribeGlass on February 27, to launch an AI powered transcription service using the Vuzix Z100 smart glasses.
The AI powered solution is designed to convert speech into text with sub-300 millisecond latency. The solution is specifically designed for the deaf or people struggling with hearing problems. It connects via Bluetooth to a customer’s smartphone or tablet to convert speech into text. The transcription service marks a strategic expansion for Vuzix Corporation (NASDAQ:VUZI) into the assistive technology market and is expected to open up new revenue streams.
“The Z100 smart glasses provide an ideal platform for TranscribeGlass’s cutting-edge AI-powered transcription,” said Paul Travers, President and CEO of Vuzix. “Our collaboration will drive adoption and innovation in the smart glasses industry, reinforcing Vuzix’ leadership in AI-enabled wearable technology.”
9. TaskUs, Inc. (NASDAQ:TASK)
Number of Hedge Fund Holders: 17
TaskUs, Inc. (NASDAQ:TASK) is an information technology service company that provides digital outsourcing services for companies. Its services help brands grow their brands in areas like social media, e-commerce, and gaming. It has also started supercharging teammates with artificial intelligence and advanced technologies to make them more productive. On February 27, TaskUs launched its Agentic AI consulting practice designed to help businesses accelerate their adoption of AI-powered automation.
The launch of the Agentic consulting service is a strategic move as TaskUs, Inc. (NASDAQ:TASK) seeks to position itself at a time when businesses are increasingly looking to integrate AI solutions into their operations. By building a new consulting and implementation business line and maintaining its core human-centered services for complex processes, the company is successfully establishing a dual revenue strategy.
“Over the next five years, AI will fundamentally reshape our world,” said Bryce Maddock, CEO of TaskUs. “Our strategic focus this year will be reimagining our business for the AI era. With our new Agentic AI Consulting practice, we will enable clients to fully realize its promise by integrating it into their operations.”
