Key Investment Points
Advancement of AI Technology:
- AI chip manufacturers (NVIDIA, AMD)
- Data center operators
- Related infrastructure companies
Growth of Cloud Computing:
- Expansion of data centers by cloud service providers
Expansion of 5G and IoT:
- Increasing demand for data centers due to rising data traffic
Major Stocks and REITs
Key Stocks:
- NVIDIA (NVDA): Leading AI chip company, crucial in the data center sector
- AMD (Advanced Micro Devices): Competitor in the AI chip market with high growth potential
- Monolithic Power Systems (NASDAQ: MPWR): Supplies 48V power solutions for AI GPUs/ASICs
REITs:
Investing in REITs that develop and operate data centers can be a profitable strategy.
Major ETFs
- SMH (VanEck Semiconductor ETF): Invests in the semiconductor industry, including NVIDIA, AMD
- BOTZ (Global X Robotics & Artificial Intelligence ETF): Focuses on robotics and AI-related companies, including those involved in data center technologies
- ARKK (ARK Innovation ETF): Invests in innovative tech companies such as Tesla, NVIDIA, and Coinbase
- Global X Data Center REITs & Digital Infrastructure ETF (NASDAQ: VPN): Focuses exclusively on companies that develop and operate data centers
Investment Considerations
- This industry is highly sensitive to technological changes, requiring ongoing analysis of companies and technology trends.
- Stock market volatility should be considered for cautious investment decisions.
- ETF investments provide diversification, but sector-focused ETFs carry higher risk.
With the U.S. government’s large-scale power grid improvements and the increasing power demand from data centers, energy production demand is expected to rise.
Stocks and REITs
- Equinix Inc. (EQIX): One of the world’s largest digital infrastructure companies, expected to generate $9.4 billion in revenue by 2025.
- Digital Realty Trust (DLR): A global data center operator offering comprehensive data solutions, with estimated revenue of $5.6 billion in 2024.
- Iron Mountain Inc. (IRM): Originally a traditional document storage company, now expanding into digital data storage and cloud computing.
- SBA Communications Corp. (SBAC): Operates data centers and telecom towers in North America, Africa, and Asia, with an estimated EPS of $8.97 in 2025.
ETFs
- Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (SRVR): A globally diversified ETF investing in data centers and digital infrastructure, offering a high 3.8% dividend yield.
- Global X Data Center REITs & Digital Infrastructure ETF (DTCR): A newly established ETF focusing on various digital infrastructure sectors, including generative AI and smart grid technology.
- The Real Estate Select Sector SPDR Fund (XLRE): A broad real estate ETF with a strong focus on data centers and telecom tower REITs.
These investment options reflect the rapid growth of digital infrastructure and the increasing demand for data centers. Each option has unique strengths, providing investors with opportunities to benefit from the fast-growing tech industry.
