There have been murmurs of a data center and cloud computing slowdown for the past two years, but none of that has materialized and the data center industry has instead accelerated as companies double down on AI. Even after DeepSeek, investors are pretty bullish on data center stocks as AI companies are learning from DeepSeek’s efficiency to create even more powerful AI models.
The data center sector is projected to grow at a 9.29% CAGR from 2025 to 2033, potentially reaching $494.5 billion by 2033. As such, there are plenty of opportunities if you dig deeper into the market and many of them have just started to rally this year. It’s a good idea to look into the ones spearheading the gains.
A team of technicians working on a server of bitcoin mining equipment in a data center.
Methodology
For this article, I screened the top-performing data center stocks year-to-date. Stocks that I have covered recently will be excluded from this list.
I will also mention the number of hedge fund investors in these stocks. Why are we interested in the stocks that hedge funds invest in? 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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
15. Insight Enterprises Inc (NASDAQ:NSIT)
Number of Hedge Fund Holders In Q4 2024: 26
Insight Enterprises Inc (NASDAQ:NSIT) is a Fortune 500 Solutions Integrator that is active in the data center sector.
The stock is up significantly so far in 2025 as it posted solid Q4 2024 earnings. Net revenue was $2.1 billion in Q4 2024, down 7% year-over-year, and gross margin expanded to 21.2%, up 170 basis points from Q4 2023.
It also beat earnings expectations with $2.66 earnings per share versus $2.53 expected. Cloud services and Insight Core services showed double-digit growth in 2024. Moreover, it spent $200 million on share repurchases in 2024, with $300 million remaining in the program.
The consensus price target of $212.5 implies 27.56% upside.
NSIT stock is up 9.29% year-to-date.
14. Silicon Motion Technology Corp (NASDAQ:SIMO)
Number of Hedge Fund Holders In Q4 2024: 39
Silicon Motion Technology Corp (NASDAQ:SIMO) makes NAND flash controllers for SSDs and other solid-state storage devices that are used in data centers.
The stock is up significantly so far in 2025 as it delivered solid results in 2024, with 25% revenue growth year-over-year. It ended up significantly outperforming its end markets.
In Q4 2024, revenue reached $191.2 million, though it did decrease 10% sequentially. Analysts were still bullish as the gross margin increased to 46.2% and the operating margin improved to 16.5%, with the company’s cash position reaching $334.3 million.
It also initiated a new $50 million share repurchase program over six months and maintained its annual dividend of $2 per ADS which is paid quarterly. Management expects an annual revenue run rate of close to $1 billion by Q4 2025.
The consensus price target of $80.63 implies 37.73% upside.
SIMO stock is up 9.38% year-to-date.
