In this piece, we will take a look at the five best data center stocks to invest in. If you want details about the industry and more stocks, then head on over to 10 Best Data Center Stocks To Invest In.
5. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 78
Micron Technology, Inc. (NASDAQ:MU) is one of the world’s largest manufacturers of memory and storage devices for computing systems. Subsequently, its products are also extensively used in the data center and enterprise computing industries. The firm is headquartered in Boise, Idaho, United States.
Like other semiconductor firms, Micron Technology, Inc. (NASDAQ:MU) is also facing the brunt of inflationary pressures on its personal computing business segments. However, just like its peers, the company is also experiencing and projecting hefty growth in the enterprise computing segment. As part of its latest earnings release, the company stated that its data center segment will grow from representing 45% of its revenue today to 62% in 2025. Additionally, its networking data center revenues have grown by an average of $250 million since the start of 2019.
Evercore ISI reiterated its $90 share price target for Micron Technology, Inc. (NASDAQ:MU) in July 2022 outlining that the company has sound management practices in place. Insider Monkey’s Q1 2022 survey of 912 hedge funds pegged 78 as owning the company’s shares.
Micron Technology, Inc. (NASDAQ:MU)’s largest investor is David Goel and Paul Ferri’s Matrix Capital Management which owns 4 million shares that are worth $311 million.
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 83
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor designer that primarily designs and sells GPUs and CPUs to both consumers and enterprises. It is one of the few companies that sells both data center processors and GPUs, which has led it to gain a secure position in the market.
Advanced Micro Devices, Inc. (NASDAQ:AMD)’s strong presence in the data center segment is evidenced by its earnings results. For instance, its earnings for last year’s final quarter revealed that data center and enterprise computing had grown annually by a massive 75%, as companies sped up their infrastructure building. As if this wasn’t enough, the subsequent quarter saw AMD rake in $2.5 billion in the segment, to mark for an even stronger 88% annual growth.
Morgan Stanley noted Advanced Micro Devices, Inc. (NASDAQ:AMD)’s strength in the server segment in a June 2022 report, that set the company’s price target to $103 and pointed out that server growth will place it on a growth trajectory. 83 of the 912 hedge funds polled by Insider Monkey during this year’s March quarter had invested in the company.
Ken Fisher’s Fisher Asset Management is Advanced Micro Devices, Inc. (NASDAQ:AMD)’s largest investor. It owns 24 million shares that are worth $2.6 billion.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 102
NVIDIA Corporation (NASDAQ:NVDA) is the world’s largest designer and seller of graphics processing units (GPUs). These products, initially used by gamers, are now widely used in data centers for modern day technologies such as artificial intelligence and machine learning. The company is headquartered in Santa Clara, California, United States.
Given that its products sit right at the heart of data center computing, it’s a no brainer that NVIDIA Corporation (NASDAQ:NVDA) is a key data center stock. For instance, its latest quarterly results revealed that data center products accounted for 45% of overall revenue, and NVIDIA Corporation (NASDAQ:NVDA)’s new Arm-based processors for this segment are yet to make their mark.
Additionally, the company has one of the strongest data center portfolios out there, as it targets six different data center products such as supercomputers, hyperscalers, and cloud computing. Due to this, NVIDIA Corporation (NASDAQ:NVDA) is estimated to rake in $22 billion in revenue from data centers by the end of 2024.
Insider Monkey surveyed 912 hedge fund portfolios for Q1 2022 and discovered that 102 had bought NVIDIA Corporation (NASDAQ:NVDA)’s shares.
Ken Fisher’s Fisher Asset Management is NVIDIA Corporation (NASDAQ:NVDA)’s largest investor through a $1.9 billion stake that comes courtesy of 7.3 million shares.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) is one of the world’s largest technology companies that is primarily known for its Windows operating system. The firm also has a commanding position in the data center space through its Azure platform which has hundreds of data centers located all over the globe.
The Azure platform is one of the strongest of its type in the world and Microsoft Corporation (NASDAQ:MSFT) is believed to have brought in $10 billion from it for its fourth quarter of 2021. Analysts have bright estimates for its future growth as well, and expect growth to stand at 36% during Q2 2022, and at 37% and 42% for the next two quarters. Azure is also the strongest growing cloud services provider in the market, beating peers such as those from Amazon and Google. Finally, as a testament to its prowess, FedEx announced in January 2022 that it will partner with the company to build a cross platform logistics solution through Microsoft Azure.
As the first quarter of this year came to an end, 259 of the 912 hedge funds polled by Insider Monkey had invested in Microsoft Corporation (NASDAQ:MSFT).
Microsoft Corporation (NASDAQ:MSFT)’s largest investor is Ken Fisher’s Fisher Asset Management which owns 27 million shares that are worth $8.5 billion.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest electronic commerce platform that allows merchants to connect with buyers. However, it has expanded its presence into other technology segments as well, one of which is the data center segment.
Amazon.com, Inc. (NASDAQ:AMZN) has some of the world’s faster data center processors that are designed using the Arm microarchitecture. These are its Graviton lineup of processors which are believed to offer the highest performance per watt per rack slot in the industry. Its data center segment has the highest gross margin of 30% for the entire company as well, and Amazon.com, Inc. (NASDAQ:AMZN) was the leading cloud service provider by market share during last year’s fourth quarter in the form of a roughly 33% market share.
Redburn set a $270 price target for the company in June 2022, as it outlined that the AWS segment is worth $3 trillion on its own. 271 out of 912 hedge funds part of Insider Monkey’s research had bought Amazon.com, Inc. (NASDAQ:AMZN)’s shares in Q1 2022.
Ken Fisher’s Fisher Asset Management is Amazon.com, Inc. (NASDAQ:AMZN)’s largest investor through a $7.7 billion stake that comes via 2.3 million shares.
Disclosure: None. You can also take a look at 10 Cryptocurrencies to Watch Amid Russia’s Attack on Ukraine and 15 Best Warren Buffett Stocks to Buy Now.
