Data center stocks have done well in the past few years as demand for computing powers jumped. This growth may continue in the coming years as analysts predict robust spending in the industry.
For example, Citigroup analysts predicted that the AI industry will need to spend over $2.8 trillion by 2029. Other studies have delivered similar predictions. This article explores some of the top data center stocks to buy as GIP nears a $40 billion deal to buy Aligned Data Centers.
BlackRock to buy Allied Data Centers
This week has had several important corporate events, including the $55 billion buyout of EA Sports. Another notable one came out on Friday when Bloomberg reported that Global Infrastructure Partners (GIP), which is owned by BlackRock, was nearing a $40 billion deal to buy Aligned Data Centers (ADC).
ADC is a major provider of data centers in the United States, where it owns over 50 locations and 78 data centers under management. Earlier this year, the company landed over $12 billion in equity and debt commitments from Macquarie Asset Management.
The new deal, if confirmed, will be important for the data center space. This article explains why data center companies like IREN (IREN), Iron Mountain, and CoreWeave will do well.
IREN (IREN)
IREN is one of the best-performing companies this year as it jumped from $5 in April to nearly $50 today. The company is much different from Aligned Data Centers in that it main business today is Bitcoin mining.
However, like other Bitcoin mining companies, it has started to pivot its business to take advantage of the ongoing AI revolution.
In a recent announcement, the company said that it has boosted its AI Cloud capacity. It now has 23k GPUs after adding 12.4k GPUs in the last few weeks. These GPUs included 7.1k NVIDIA B300s, 4.2k NVIDIA B200s, AND 1.1K AMD MI350Xs. It spent about $674 million for this purchase.
Most importantly, IREN is seeing strong demand for its AI solutions. In its recent results, the company said that its AI cloud business doubled its revenue to $7 million in the last quarter.
The company now anticipates generating an ARR of $500 million in the first quarter. Also, the firm may receive a big order as its competitors, like CoreWeave and Nebius have done. Nebius received a $17 billion deal from Microsoft, while CoreWeave has received other deals.
Iron Mountain (IRM)
Iron Mountain is another top data center stock to buy. It has over 240,000 customers and is present in 61 countries.
The most recent results showed that it expects its annual revenue will be over $6.8 billion in revenue, up from $6.15 billion last yer. The adjusted EBITDA will be $2.54 billion this year, an increase from $2.236 billion.
Most of its growth is in its data center business, which the management expects will have a revenue growth of 30%. Based on the current backlog, the company’s revenue growth will be about 25%. Therefore, the company’s stock will likely continue growing it focuses more on the data center industry.
CoreWeave (CRWV)
CoreWeave is another top data center stock to buy. Like IREN, the company started as a Bitcoin miner and has now pivoted its business to become a major player in the data center industry. It recently announced a plan to buy Core Scientific, a company in the Bitcoin mining and AI data center sector.
The company is seeing robust growth as it partners with firms like Microsoft and OpenAI. It recently announced a $14 billion deal with Meta Platforms, the parent company of Facebook and WhatsApp. Analysts expect that its revenue will jump to $5.13 billion this year and $10.8 billion next year.
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