We recently compiled a list of the 10 Best Performing Data Center Stocks So Far in 2025. In this article, we are going to take a look at where Micron Technology, Inc. (NASDAQ:MU) stands against the other data center stocks.
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.
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).
A close-up view of a computer motherboard with integrated semiconductor chips.
Micron Technology, Inc. (NASDAQ:MU)
YTD Returns: 17.4%
Number of Hedge Fund Holders: 94
Micron Technology, Inc. (NASDAQ:MU) designs, develops, manufactures, and markets memory and storage products, including dynamic random-access memory (DRAM), flash memory (NAND), solid-state drives (SSDs), and High Bandwidth Memory (HBM) globally. The company is well-positioned to capitalize on technological advancements in AI, 5G, autonomous vehicles, and data centers.
Micron Technology, Inc. (NASDAQ:MU) has surged 17.4% in 2025, outperforming the SOX Index by 14.3%. The company reported a remarkable 400% year-over-year and 40% sequential growth in its Q1 2025 (November quarter) data center revenues, which now make up over 50% of the revenue mix. While the bit shipment outlook is weaker for Q2 due to customer inventory adjustments, management anticipates an improvement by spring and an acceleration in bit volumes in the second half of the year.
During the quarter, the company focused on improving yields and capacity, leading to more than a doubling of its HBM revenue sequentially. By 2028, the company expects the HBM total addressable market (TAM) to grow fourfold from the $16 billion level in 2024 and to exceed $100 billion by 2030. Management has also raised the HBM market TAM forecast to now surpass $30 billion in 2025.
Micron Technology, Inc. (NASDAQ:MU)’s HBM3E 8-high memory is a key component in NVIDIA’s Blackwell B200 and GB200 platforms. The company is currently scaling up production of its HBM3E 12-high, which offers a 20% reduction in power consumption compared to HBM3E 8-high memory from competitors while delivering 50% greater memory capacity.
Overall MU ranks 7th on the best performing data center stocks so far in 2025. While we acknowledge the potential of MU as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MU 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.
Disclosure: None. This article is originally published at Insider Monkey.
