The rapid expansion of digital technologies and data-intensive applications—including artificial intelligence (AI), cloud computing, and enterprise digital transformation—has led to an unprecedented surge in demand for data centers. Hyperscalers, large-scale cloud service providers (CSPs), have emerged as the primary force behind the increasing need for AI-ready data centers, as foundational AI models require immense computational power.
The Soaring Demand for Data Centers
According to an October 2024 McKinsey & Company report, global data center capacity demand is projected to grow at an annual rate of 19% to 22% from 2023 to 2030, reaching between 171 GW and 219 GW. This marks a significant jump from the current demand of 60 GW. To prevent potential shortfalls, the industry would need to build more than double the total data center capacity constructed since 2000 in just a fraction of the time.
Power Supply Constraints Pose a Challenge
With data center growth accelerating, power supply constraints have become a pressing issue. Morgan Stanley’s Global Head of Sustainability Research, Stephen Byrd, highlighted in a CNBC interview that the U.S. could face a power deficit of 36 GW by 2028. Solutions to address these bottlenecks include leveraging nuclear energy, repurposing cryptocurrency mining facilities, and deploying fuel cells to meet escalating energy demands.
The Shift in Power Usage Patterns
A January 2025 report from Boston Consulting Group (BCG) predicts 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%. Conversely, enterprises maintaining on-premises data centers are expected to see their share decline from 10% to 5% as workloads continue migrating to cloud and colocation providers. Meanwhile, colocation providers will account for 50% of power demand as hyperscalers increasingly rely on their infrastructure to scale efficiently.
Methodology for Ranking the Best-Performing Data Center Stocks
To determine the 10 best-performing data center stocks in 2025, we analyzed various U.S.-listed data center companies based on data from exchange-traded funds (ETFs), research reports, and proprietary databases. We then ranked the top-performing companies by their year-to-date (YTD) stock price returns. Additionally, we factored in hedge fund holdings as of Q4 2024 to assess investor sentiment.
Intel Corporation (NASDAQ:INTC) – A Standout Performer
YTD Returns: 24.0%
Number of Hedge Fund Holders: 83
Intel Corporation (NASDAQ:INTC) has emerged as a strong performer in 2025, with its stock price surging 24% YTD, outperforming the SOX Index by 21%. This rally follows a challenging 2024 when Intel’s stock plunged by 60%. Renewed optimism in 2025 stems from speculation about potential strategic actions, including asset sales, spin-offs, or even a private equity acquisition.
On February 18, Intel’s stock spiked 17% after Bloomberg reported that buyout firm Silver Lake was considering acquiring a majority stake in Altera, Intel’s programmable chip subsidiary. Although Reuters estimates the deal’s value at $9 billion—significantly lower than the $17 billion Intel paid for Altera in 2015—the potential transaction could unlock value for shareholders. Intel’s management has already hinted at selling a stake or launching an IPO for Altera, with a decision expected in early 2025.
Despite its strong YTD performance, Intel’s stock has surpassed its consensus target price of $21, implying a possible downside of 16%. A finalized resolution on its strategic options could further impact valuation in the coming months.
AI Stocks vs. Data Center Stocks: Where’s the Bigger Opportunity?
While Intel remains a solid performer in the data center space, our research suggests that AI stocks present a higher return potential in a shorter timeframe. Investors seeking the best value AI stock trading at less than five times its earnings should explore our latest report for promising opportunities.
Stay ahead in 2025’s booming data center industry by tracking the top stocks and investment trends shaping the future of AI and cloud computing.
