The rise of artificial intelligence (AI) has been a whirlwind of innovation and growth across numerous industries. That makes the case for the best data center stocks to buy.
Demand for advanced data center infrastructure has skyrocketed in the last few years. The companies at the forefront of this technological wave are poised to capitalize on the exponential growth in data processing and storage. As AI models become more complex and demand increases exponentially, data centers form the bedrock for power computation and storage needs.
Investors keen on profiting from the AI craze should be eyeing top data center stocks to add to their portfolios.
Now, here are the best data center stocks to buy in 2024!
Dell Technologies (DELL)
Dell Technologies (NYSE:DELL) is a force to be reckoned with in the data center space. Its comprehensive portfolio of servers, storage solutions and networking products provide the foundation for enterprises to build AI-powered infrastructure.
Dell’s PowerEdge servers provide robust performance and scalability, making them ideal for handling the most demanding AI workloads. Additionally, the company’s networking solutions ensure seamless data flow with the data center, a critical factor in ensuring AI applications run smoothly and efficiently. Dell’s strategic focus on edge computing is also a strong competitive advantage. Wall Street is particularly bullish after the company posted strong results for FY23. Although top-line growth fell 14% year-over-year (YOY), net earnings grew 32% YOY to $3.2 billion. These recent developments align perfectly with AI, making Dell stock one of the best data center stocks to buy now.
Arista Networks (ANET)
Arista Networks (NYSE:ANET) is a powerhouse in high-performance networking solutions. The company specializes in data center switches and routers, delivering lightning-fast speeds, low latency and unmatched scalability.
Arista Networks’ technology and infrastructure are critical to developing and deploying advanced AI applications. The combination of its CloudVision platform and EOS cloud operating system is essential for supporting AI workloads that often involve transferring and processing enormous data sets. AI hyperscalers like Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG, NASDAQ:GOOGL) rely heavily on Arista’s networks for their internal infrastructure. In the 2023 fiscal year, Arista saw record revenue, earnings and FCF from operations. Demand for Arista’s products has remained strong, and its operating margins have expanded significantly over the last decade. With AI workloads becoming increasingly more complicated in presenting the case for network conjunction, ANET stock is well-positioned to address these bottlenecks.
Synopsys (SNPS)
Synopsys (NASDAQ:SNPS) might not be a household name like the others, but it plays a pivotal role in the data center world. The company provides software tools used in the design of chips found in data center servers, networking equipment and other essential hardware.
The rise of AI has created a strong tailwind for Synopsys. More sophisticated AI chips are crucial to meet the growing demands of AI workloads. Synopsys’ tools hold a key to innovation in performance and power efficiency. By working directly with chip designers, Synopsys can help unlock the full potential for enhanced computing power. In the 2023 fiscal year, Synopsys saw record revenue of $5.84 billion, up 15% YOY. EPS increased 26% YOY to $7.92 per share while delivering strong cash flow from operations. Growth also doesn’t seem to be slowing down anytime soon, with revenue up 25% in Q1 FY24 and EPS coming in at the high end of guidance. As leading semiconductors continue to rely on their robust semiconductor IP portfolio, Synopsys is one of the top data center stocks to buy in 2024.
On the date of publication, Terel Miles did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
