Opportunities in Data Center Concept Stocks Amid the 2024 AI Wave: An In-Depth Comparison of Five Major U.S. Tech Giants

Why Have Server Concept Stocks Become Investment Focal Points?

Driven by explosive growth in artificial intelligence technology, data center concept stocks have quickly become a hot investment in the US stock market. The global AI race sparked by the launch of ChatGPT has led to exponential growth in computing power demand—Huawei GIV predicts that by 2030, global intelligent computing power will reach 52.5 ZFLOPS, with a compound annual growth rate of 82.65% from 2021 to 2030.

The logic behind this trend is clear: servers, as the core infrastructure for data processing, will see continued demand growth. The proliferation of IoT devices, expansion of cloud computing services, and the need for massive model training all create unprecedented growth opportunities for server-related companies.

Top 5 US Server Concept Stocks Comparative Analysis

Cisco Systems(CSCO): A Stable Choice for Network Infrastructure

As a leader in communication infrastructure, Cisco holds over 40% market share in global enterprise networks. The company’s investment highlights include nine mergers and acquisitions in 2023. After announcing the acquisition of Splunk, it will become one of the world’s largest software companies.

More notably, Cisco and NVIDIA jointly launched the Nexus HyperFabric AI clusters integrated solution, providing a complete hardware + software package for enterprise on-premises generative AI deployment. This product supports cloud management, demonstrating Cisco’s innovation capability in the server field.

Financially, Cisco has maintained stable growth over the past seven years, with annual earnings generally exceeding expectations. The market expects EPS to remain around $3.7 in the coming years. Its stable dividend payout attracts funds and long-term investors. Technically, the daily DMI and MACD have formed a golden cross signal.

Vertiv Holdings(VRT): Rapid Rise of Data Center Infrastructure

Vertiv focuses on providing critical infrastructure for data centers and communication networks, with operations in over 130 countries. In 2023, EPS reached $1.77, a 233% year-over-year increase, mainly benefiting from improved gross margins. Moody’s and S&P have upgraded its credit ratings to Ba3 and BB, reflecting significant financial improvement.

The market expects over 30% growth in 2024. Although the dividend yield is less than 0.1%, its growth stock characteristics are clear, making it more suitable for investors with higher risk tolerance. Technically, the stock price remains within an upward channel, recently pulling back to the channel bottom, with MACD showing potential for a short-term golden cross.

Oracle(ORCL): Accelerating Transformation of Cloud Infrastructure Business

Oracle is completing its transition from a software license provider to a cloud service provider. In Q3 of fiscal 2024, revenue from cloud infrastructure and software services surpassed software licensing revenue for the first time. The company plans to invest about $10 billion in data center expansion in the next fiscal year, including a Salt Lake City AI data center comparable in scale to eight Boeing 747s.

CEO Safra Catz stated that as OCI capacity gradually meets demand, subsequent quarterly growth is expected to accelerate sequentially. The company forecasts double-digit revenue growth for fiscal 2025. Although EPS and revenue occasionally fall slightly below expectations, the overall trend is positive. Technically, the stock has risen nearly 80% since 2023, with short-term support near $130, where a pullback may occur.

Digital Realty Trust(DLR): Stable Income from Data Center REITs

As one of the world’s largest data center operators, Digital Realty’s advantage lies in tenant stickiness—once deployed, difficult to relocate. Compared to commercial real estate, data center real estate prospects are clearer, with industry demand steadily rising.

The Federal Reserve’s rate-cut cycle is relatively favorable for REIT assets—generally, REIT valuations tend to increase during rate cuts. Technically, MACD and DMI show a pullback signal; bullish investors may consider buying near the upward trendline around $140, with an eye on the previous high of $154 within the year. The stock is expected to rise to $180 or higher in the next two years.

NVIDIA(NVDA): Absolute Leader in AI Chips

NVIDIA leads the GPU market by a large margin. CEO Jensen Huang predicts the arrival of the million-GPU data center era—future network interactions may all involve cloud-based generative AI. The company maintains its technological edge through the CUDA platform, becoming the standard choice for developers.

Financial data is impressive: after the AI boom in 2023, free cash flow surged from $3.81 billion to $27.02 billion. In May this year, data center revenue grew 427% YoY to $22.6 billion, mainly driven by H100 GPUs. The next-generation Blackwell GPUs will bring further growth.

Technically, since the beginning of the year, the stock experienced two upward waves at around $45. Currently, indicators have weakened, and the market is digesting stock splits and executive share reductions, possibly requiring several weeks of consolidation. Investors may consider buying on dips below the 50-day moving average or chasing after a breakout above $140.

How to Invest in Data Center Concept Stocks

Besides direct stock holdings, Taiwanese investors often use CFD(trading. This method is especially suitable for small-scale traders to leverage short-term volatility and supports short selling. CFD trading does not require paying the full principal—only margin—to control larger positions. However, higher leverage increases risk, so personal risk tolerance should be carefully assessed.

Industry Outlook and Risk Tips for the Next 5 Years

After the 2023 AI wave, many server concept stocks entered a correction phase in Q2 2024. But since major tech giants, startups, and countries worldwide are still competing to boost equipment capacity, a correction is expected to complete in Q3, followed by a new upward wave.

Over the next five years, industry restructuring and淘汰 are anticipated, with leading companies like NVIDIA, Cisco, and rental REITs like Digital Realty Trust having relatively higher certainty, making them more suitable for long-term, stable investors.

It is important to note that server concept stock prices are influenced by multiple factors: market demand changes, competitive landscape evolution, company performance, management capabilities, etc. If growth expectations are revised downward, even leading companies may face significant declines. Investors should remain vigilant and regularly review their investment logic.