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.
13. Riot Platforms Inc (NASDAQ:RIOT)
Number of Hedge Fund Holders In Q4 2024: 37
Riot Platforms Inc (NASDAQ:RIOT) is a Bitcoin mining company that operates data centers too.
The stock is up significantly so far in 2025 mostly due to Bitcoin rising significantly and its pivot to AI. The company announced new board members who have expertise in AI and data centers and engaged financial advisors to possibly convert its 600 MW Corsicana facility for AI and HPC.
Moreover, Riot reported mining 527 Bitcoins in January 2025, which increased 2% from the previous month and the total hash rate increased 171% year-over-year to 33.5 EH/s.
Riot has scheduled its fourth quarter and year-end 2024 earnings conference call for February 24, 2025.
The consensus price target of $17.55 implies 46.68% upside.
RIOT stock is up 15.72% year-to-date.
12. Nutanix Inc (NASDAQ:NTNX)
Number of Hedge Fund Holders In Q4 2024: 51
Nutanix Inc (NASDAQ:NTNX) is a cloud platform that lets organizations modernize their IT operations with web-scale engineering and consumer-grade design.
The stock is up significantly so far in 2025 as it announced a partnership with a major cloud service provider on top of an earlier November 2024 financial report that came in strong.
Its Q1 FY2025 results came in with sales growing 16% to $591 million and annual recurring revenue growing 18% year-over-year to $1.97 billion. FCF came in at $151.9 million, with a non-GAAP operating margin of 20%.
Nutanix also expanded its partnership with AWS and received recognition as a Leader in Gartner’s Magic Quadrant for both Distributed Hybrid Infrastructure and File and Object Storage Platforms. Plus, it is benefiting from potential market share gains following VMware’s acquisition by Broadcom.
Full-year FY2025 revenue is projected between $2.435 billion and $2.465 billion. Non-GAAP Operating Margin expected between 16% to 17%.
The consensus price target of $79.5 implies 10.99% upside.
NTNX stock is up 16.19% year-to-date.
11. Udemy Inc (NASDAQ:UDMY)
Number of Hedge Fund Holders In Q4 2024: 25
Udemy Inc (NASDAQ:UDMY) is an online learning and teaching marketplace. Online courses are sold on the platform.
The stock is up significantly so far in 2025 as it posted Q4 2024 earnings that beat analyst estimates. Revenue grew 5.5% to $199.94 million and beat estimates by 2.66%. Full-year revenue grew 8% to $787 million. Enterprise segment revenue grew 18% to $494.5 million.
Moreover, adjusted EBITDA improved to $43 million in 2024. In comparison, Udemy posted a $50 million loss in 2022. The company also completed a $150 million share repurchase program and projects $787 million to $803 million in sales, along with adjusted EBITDA of $75 to $85 million for all of 2025.
Wall Street analysts have reacted by hiking their price targets.
The consensus price target of $10.82 implies 8.67% upside.
UDMY stock is up 18.83% year-to-date.
10. Couchbase Inc (NASDAQ:BASE)
Number of Hedge Fund Holders In Q4 2024: 25
Couchbase Inc (NASDAQ:BASE) is a cloud database platform company that provides integrated data access solutions.
The stock is up significantly so far in 2025 as analysts expect solid results when it reports its Q4 FY2025 results on February 25, 2025. Strong net new Annual Recurring Revenue growth is anticipated in Q4 FY2025.
In addition, several million dollars in pre-contracted ARR are expected to contribute to growth. This is on top of 13% year-over-year revenue growth to $51.6 million in Q3, where the company also posted annual recurring revenue growth of 17% year-over-year to $220.3 million.
The consensus price target of $23.13 implies 24.76% upside.
BASE stock is up 19.44% year-to-date.
9. TD Synnex Corp (NYSE:SNX)
Number of Hedge Fund Holders In Q4 2024: 33
TD Synnex Corp (NYSE:SNX) is an IT distributor that includes cloud solutions.
The stock is up significantly so far in 2025 as it beat Q4 2024 earnings estimates. Revenue jumped 10% year-over-year to $15.8 billion, exceeding company guidance of $14.9-$15.7 billion.
Furthermore, non-GAAP earnings per share reached $3.09. This surpassed analyst expectations of $2.84. It also returned $750 million to shareholders in fiscal 2024 through $612 million in share repurchases and $138 million in dividends and announced a 10% dividend increase to $0.44 per share.
Asia Pacific and Japan saw 31.7% revenue growth.
The consensus price target of $144.38 implies 0.01% upside.
SNX stock is up 22.86% year-to-date.
8. Micron Technology Inc (NASDAQ:MU)
Number of Hedge Fund Holders In Q4 2024: 94
Micron Technology Inc (NASDAQ:MU) is a semiconductor company that makes memory and storage products.
The stock is up significantly so far in 2025 despite it disappointing earlier. In December 2024, the sentiment was bearish as it posted disappointing Q1 FY2025 results. In fact, multiple law firms are now investigating the company.
However, it is now one of the leading S&P 500 companies YTD as a recovery takes hold. The company is developing semiconductor operations in Sanand, India, and its phase 1 is approaching 2025 completion. The stock also jumped after news that Meta Platforms is planning a major investment in humanoid robotics, which could drive significant demand for Micron’s memory solutions used in Nvidia’s GPUs.
The consensus price target of $134.96 implies 28.23% upside.
MU stock is up 25.95% year-to-date.
7. Intel Corp (NASDAQ:INTC)
Number of Hedge Fund Holders In Q4 2024: 83
Intel Corp (NASDAQ:INTC) makes semiconductors and other computing products that are widely used in data centers.
The stock is up significantly so far in 2025 as there are talks swirling around of a potential break-up of the company. Apparently, Broadcom is exploring the acquisition of Intel’s chip design business while TSMC is considering taking control of manufacturing facilities. Meanwhile, Silver Lake Management is nearing a deal to acquire a majority stake in Intel’s Altera programmable chips unit.
Intel is also receiving tailwinds from the Trump administration’s support for domestic AI chip manufacturing.
The consensus price target of $26.9 implies 4.39% upside.
INTC stock is up 27.63% year-to-date.
6. Applied Digital Corp (NASDAQ:APLD)
Number of Hedge Fund Holders In Q4 2024: 41
Applied Digital Corp (NASDAQ:APLD) is a crypto company but it is increasingly focusing on cloud services for HPC computing.
The stock is up significantly so far in 2025 as it entered into a $5 billion perpetual preferred equity financing facility with Macquarie Asset Management for HPC business. It got an initial investment of up to $900 million for the Ellendale HPC Campus development.
In Q2 FY2025, revenue grew 51% year-over-year to $63.9 million, and the company reported a better-than-expected adjusted net loss of $0.06 per share versus an expected $0.14 loss. Adjusted EBITDA increased 93% to $21.4 million.
It also surged after Nvidia’s SEC filing revealed continued ownership of 7.7 million APLD shares. This is particularly significant as Nvidia sold out of other AI-related holdings like SoundHound AI and Serve Robotics.
The consensus price target of $12.11 implies 21.23% upside.
APLD stock is up 31.66% year-to-date.
5. IREN Ltd (NASDAQ:IREN)
Number of Hedge Fund Holders In Q4 2024: 44
IREN Ltd (NASDAQ:IREN) is an Australian company that has Bitcoin mining data centers but also has AI cloud computing hyperscale data centers.
The stock is up significantly so far in 2025 as its Q2 FY2025 earnings beat expectations, with sales growing 180.89% to $119.6 million. It also posted a net profit of $18.9 million and recovered from a $51.7 million loss.
Also, the company is developing a 600MW Sweetwater 2 site to create a 2GW data center hub.
The consensus price target of $20.7 implies 53.44% upside.
IREN stock is up 34.96% year-to-date.
4. Sify Technologies Ltd (NASDAQ:SIFY)
Number of Hedge Fund Holders In Q4 2024: 1
Sify Technologies Ltd (NASDAQ:SIFY) is an ICT solutions provider that has data centers and cloud services. It is based in India.
The stock is up significantly so far in 2025 as revenue increased 21% year-over-year and EBITDA grew 13% year-over-year. However, it is still unprofitable after tax.
It recently commissioned 5 megawatts of additional data center capacity. It also became India’s first NVIDIA DGX-Ready Data Center partner certified for liquid cooling in September 2024. This certification enables support for 130 KW/rack capacity.
SIFY stock is up 69.23% year-to-date.
3. Super Micro Computer Inc (NASDAQ:SMCI)
Number of Hedge Fund Holders In Q4 2024: 45
Super Micro Computer Inc (NASDAQ:SMCI) is a company that has HPC and storage solutions for AI uses and data centers.
The stock is up significantly so far in 2025 as it announced its fiscal 2026 target of $40 billion and has been clearing up confusion surrounding its accounting practices that threatened its Nasdaq listing. It is now on track to submit the delayed 10-K report by the February 25, 2025 deadline.
An internal probe found no evidence of fraud or misconduct following earlier Hindenburg Research allegations. It also got a significant contract with Elon Musk’s xAI data center in Tennessee.
The consensus price target of $60.2 implies 1.15% downside.
SMCI stock is up 85.78% year-to-date.
2. GDS Holdings Ltd (NASDAQ:GDS)
Number of Hedge Fund Holders In Q4 2024: 32
GDS Holdings Ltd (NASDAQ:GDS) makes high-performance data centers in China and Southeast Asia.
The stock is up significantly so far in 2025 as there have been rumors of a potential DayOne IPO, though the company later clarified that no concrete IPO plans exist. DayOne is GDS Holdings’ international data center business unit that operates outside of mainland China.
Regardless, it surged after TD Cowen’s price target increased to $39. Morgan Stanley also maintained an Overweight rating with a $39 price target ahead of Alibaba’s earnings, which is a major client of GDS Holdings.
The consensus price target of $22.6 implies 49.45% downside.
GDS stock is up 89.85% year-to-date.
1. VNET Group Inc (NASDAQ:VNET)
Number of Hedge Fund Holders In Q4 2024: 26
VNET Group Inc (NASDAQ:VNET) is China’s leading carrier-neutral internet data center services provider. It also has a network of data centers.
The stock is up significantly so far in 2025 as Citi raised its price target to $16.1 from $4 as it has strong potential in China’s AI market. The company also announced its first-ever inclusion in the S&P Global Sustainability Yearbook 2025.
VNET has been capitalizing on the growing demand for AI-driven solutions, especially in China post-DeepSeek. It has a data center infrastructure that is well-positioned to support growing AI computing.
The consensus price target of $4.78 implies 65.4% downside.
VNET stock is up 186.92% year-to-date.
While we acknowledge the potential of VNET as an investment, our conviction lies in the belief that some 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 VNET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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