Four data center stocks, Equinix Inc. (EQIX), CoreSite Realty Corp. (COR), Iron Mountain Inc. (IRM) and InterXion Holding NV (INXN), could be positioned to sharply outperform the broader market in the coming years as the industry experiences a second leg of growth.
Full Answer
What are the best data center stocks to buy now?
Microchip Technology, Inc. (NASDAQ: MCHP) We start the list of best data center stocks to buy now with Microchip Technology, Inc., they are an American Corporation with corporate headquarters located in Chandler, Arizona. The company produces microcontroller, mixed-signal, analog, and Flash-IP integrated circuits.
What is the future of the data center market?
In the U.S. market alone, the data center market is expected to reach a revenue of over $69 billion by 2024. A recent press release explained the main drivers of this growth:
What is driving the demand for data center capacity?
Demand for data center capacity has soared in recent years, driven by rapid growth in data. This trend accelerated during the pandemic as more people worked from home and streamed content over the internet. As a result, the industry completed a record number of new data centers last year.
How will rising interest rates affect the data center industry?
Rising interest rates are partly to blame, pressuring the economics of leasing tower space and financing new data centers. Investors have favored cyclical sectors more closely tied to an economic recovery.
Is there a demand for data centers?
Demand for data centers set a new record in 2021, particularly in the United States, which absorbed 885.7MW across 14 domestic markets – a 44.3% increase year-over-year from 2020, which itself set a record of 614 MW, an increase of more than 70% from 2019.
Is IT good to invest in data center?
Data center REITs allow investors to benefit from the growth in data usage. According to IDC, data usage is on track to grow at a 24% compound annual rate through 2025. That should drive the need for additional infrastructure to transmit and store data, including more data center capacity.
Which data center REIT is best?
Best Data Center REITsEquinix is one of the world's biggest data center REITs. ... DigitalBridge Group is one of the world's largest digital infrastructure investment firms. ... Digital Realty Trust is a REIT that invests in carrier-neutral data centers. ... CyrusOne is a high-growth data center REIT.More items...•
What will replace data center?
Cloud computing will virtually replace traditional data centers within three years. Cloud data center traffic will represent 95 percent of total data center traffic by 2021, says Cisco.
Who is investing in data centers?
Top 5 data centre stocks to watchDigital Realty Trust.CyrusOne.Amazon Web Services.Equinix.China Telecom Corp.
How do I invest in a data center REIT?
How to Invest in Data Center REITs. There are numerous data center REITs listed on the FTSE Nareit US Real Estate Indexes. Many investors acquire shares in these REITs via REIT mutual funds or exchange-traded funds (ETFs), but individuals can also invest directly in an office REIT with the help of a broker.
Are data centers profitable?
While being built, a typical data center employs 1,688 local workers, provides $77.7 million in wages for those workers, produces $243.5 million in output along the local economy's supply chain, and generates $9.9 million in revenue for state and local governments.
Is dlr a good stock to buy?
Out of 10 analysts, 5 (50%) are recommending DLR as a Strong Buy, 1 (10%) are recommending DLR as a Buy, 4 (40%) are recommending DLR as a Hold, 0 (0%) are recommending DLR as a Sell, and 0 (0%) are recommending DLR as a Strong Sell. What is DLR's earnings growth forecast for 2022-2024?
Is Equinix overvalued?
Because Equinix is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 6.4% over the past three years and is estimated to grow 7.87% annually over the next three to five years.
Will data centers become obsolete?
In 2019, Gartner predicted that by 2025, 80% of enterprises will shut down their traditional data centers. Today, the trend shows no sign of slowing down.
What is the future of data centers?
A Look Into the Future of Data Centers As information and data multiply, in-house, local data storage centers will struggle to stay afloat with increased storage requirements and capabilities for data management. The expansion of remote work amidst COVID-19 has led many companies to adopt a hybrid cloud approach.
Is cloud better than data center?
Most cloud providers actually do a better job than data centers when it comes to security because they have experts who handle the security, management, and maintenance of the servers and infrastructure used.
What is a data center?
A data center is a dedicated space that is used to house computer systems and associated components such as telecommunications and storage systems . Data centers are also defined as a vast volume of data that is stored, backed up, and recovered.
How much money did Biden invest in broadband?
As a result of the increasing demand for the need of digital support, the Biden Administration will expand broadband or wireless broadband via 5G to every American where he will invest $20 billion in rural broadband infrastructure.
Why are data centers important?
Data centers are crucial to digital growth, given their use as the hubs and spokes of the internet. Corporate customers lease data center space based on their power needs in order to to exchange and store data, connect to cloud providers, and access the internet, per Barron’s .
What is Equinix data center?
Equinix, CoreSite and InterXion all focus on “retail” data centers, which are network-dense campuses by which companies lease out space to exchange information and access cloud providers like Amazon, which also runs its own data centers. Wholesale centers, on the other hand, which focus on storage and networking for large companies and hyperscale customers, have less attractive leasing rates, according to Berenberg Capital Markets.
How much will InterXion increase Ebitda?
While InterXion shares trade at 17 times enterprise value to Ebitda, representing a premium to the industry, the company expects to increase Ebitda by 16% in 2019 and grow revenue by 15%, well above the industry’s median forecast.
Is data center space booming?
While the data center space is booming, headwinds remain, including the threat of major cloud providers building out their own data centers, thus taking business away from third-party sites. The growth of “software-defined” networks also puts the market at risk, offering server space without the need for physical cables in a data center. Meanwhile, slowing demand may threaten these high-flying stocks, with reports from semiconductors including Intel Corp. ( INTC) and Nvidia Corp. ( NVDA) signaling weaker demand for chips used in data centers, adding to remarks from tech giants like Microsoft Corp. ( MSFT) and Facebook Inc. ( FB) indicating strong, yet slowing 2019 capital expenditures.
How much wireless penetration will be in 2021?
Fifth-generation wireless is still in the early stages, with penetration at just 4% in North America. It’s expected to reach 17% in 2021 and 37% by 2022, according to Morgan Stanley. For data centers, information-technology budgets are expected to grow 1.4% in 2021 after contracting 2.5% in 2020.
Will 5G boost tech stocks?
Soaring demand for bandwidth and the rollout of 5G helped propel tech stocks higher in 2020. So it’s surprising that cell towers and data centers—two of the industries tied to those themes. Telecoms’ media subsidiaries could get a boost as the U.S. economy recovers from Covid-19.
4 Best Bets
Micron MU is gaining from solid memory-chip demand among data-center operators as more and more workers and students work and learn from home amid coronavirus-led social-distancing measures being adopted globally. Furthermore, it is well poised to benefit from the resurgence in DRAM demand, backed by a progress in customer inventory adjustments in the cloud, graphics and the PC markets.
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This chipmaker should benefit as data centers adopt new technologies over the next decade
Trevor primarily covers tech and financials, with a particular interest in artificial intelligence, blockchain, and other innovative technologies. He grew up in Ohio and later moved to the Pacific coast. In his free time, Trevor enjoys reading, traveling, stargazing, health, and fitness.
The leader in accelerated computing
In 1999, NVIDIA invented the graphics processing unit (GPU), a chip capable of parallelizing computing-intensive code. In other words, GPUs can handle lots of data very quickly. While these chips were originally created to render ultra-realistic video game graphics, they have since become an important part of data centers.
A three-chip company
NVIDIA has also expanded beyond its trademark GPU. In 2020, it completed its $7 billion acquisition of Mellanox, a company that specializes in high-performance networking solutions. Since the merger, NVIDIA has introduced a new chip that incorporates Mellanox technology: the data processing unit (DPU).
The bottom line
NVIDIA is now a three-chip company, meaning its product portfolio now addresses a greater portion of data center infrastructure. And in the years ahead, NVIDIA should see strong demand as GPUs become the most prevalent data center processor, and ARM chips become the most prevalent data center CPU.
Data Center Market Insights - 2030
The global data center market was valued at $187.35 billion in 2020, and is projected to reach $517.17 billion by 2030, registering a CAGR of 10.5% from 2021 to 2030. Datacenter physical facility in an enterprise designed to share IT operations and equipment’s to store, process, and disseminating data and applications.
Impact Of Covid-19 On Data Center Market-
The emergence of COVID-19 has significantly affected the growth of data center market in 2020. However, surge in demand from cloud computing network solutions is acting as a prime factor hampering the market growth.
Top Impacting Factors
Significant factors that impact the growth of the global data center industry include surge in penetration of high-end cloud computing in enterprises coupled with rise in data center complexities due to scalability.
Key Points
Digital Realty inked a deal to buy a 55% stake in an African data center landlord, and investors reacted as they usually do in these situations.
NYSE: DLR
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What happened
Shares of giant data-center real estate investment trust (REIT) Digital Realty Trust ( DLR -1.86% ) have fallen as much as 10.9% this week, according to data from S&P Global Market Intelligence. By the start of trading on Friday, the stock had pared that loss to roughly 9%.
So what
After the close of trading on Jan. 3, Digital Realty announced that it had agreed to acquire a 55% stake in Teraco, valuing that company at $3.5 billion.
Now what
Digital Realty is clearly looking to its long-term future with the Teraco deal. That's a positive for investors, but it doesn't change the fact that making acquisitions is costly in the near term, and thus, investors often react by selling shares. That appears to be the backdrop for the share action this week.
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