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The unstoppable wave of artificial intelligence (AI) is reshaping industries and fueling an unprecedented demand for data centers. As AI weaves its way into most sectors, data centers have emerged as the powerhouse behind this technological evolution. These high-tech facilities are tasked with processing and storing colossal amounts of information that AI uses, ensuring seamless connectivity and powering next-generation innovations.
In essence, data centers are the unsung heroes driving the AI revolution. In fact, experts predict that by 2027, AI could explode into a whopping $407 billion industry, reshaping the digital landscape. From self-driving cars to personalized online shopping, businesses are leaning into AI like never before, pushing data centers to their limits. By 2025, projections indicate that AI will command over 50% of all data center capacity, forcing these digital fortresses to adapt and scale rapidly.
With such promising trajectories, it’s no surprise that several AI data center companies have recently delivered standout earnings results. Let’s take a closer look at three top-notch AI data center stocks riding this wave of growth and innovation.
Data Center Stock #1: Marvell Technology
Delaware-based Marvell Technology (MRVL) has spent over 25 years earning the trust of the world’s top tech giants by delivering cutting-edge semiconductor solutions that move, store, process, and secure global data. From the core of cutting-edge data centers to the far reaches of the network edge, Marvell’s state-of-the-art System-on-a-Chip (SoC) designs blend analog, mixed-signal, and digital processing expertise, delivering the performance and efficiency required in today’s data-driven world.
Valued at around $2.8 billion by market capitalization, shares of this chip company have skyrocketed a stunning 102% over the past 52 weeks and 77% on a YTD basis, far outpacing the broader S&P 500 Index’s ($SPX) 31.7% annual returns and 27.1% YTD gains.
On Oct. 31, the company paid its shareholders its first-ever quarterly dividend of $0.06 per share. The company’s annualized dividend of $0.24 per share translates to a 0.21% dividend yield. With a conservative payout ratio of 33%, the company has room for further dividend increases.
After the company’s fiscal 2025 third-quarter earnings results on Dec. 3, which blew past Wall Street forecasts and revealed a powerful Q4 outlook, shares of Marvell took off a notable 23.2% in the subsequent trading session. Total revenue for the quarter jumped 6.9% year-over-year to $1.5 billion, sailing past estimates by roughly 4%. Meanwhile, the adjusted EPS of $0.43 climbed 4.9% year-over-year and surpassed projections by almost 5.5%.
Marvell delivered a standout quarter, with data center revenue soaring by a remarkable 98.1% year over year to $1.1 billion, making up about 73% of the company’s total revenue. This surge was fueled by strong demand for AI-related products, particularly its custom AI chips. The company also demonstrated robust operational efficiency, generating an impressive $536.3 million in cash flow from operations, underscoring its financial strength and leadership in the data infrastructure market.
Looking forward to Q4 of fiscal 2025, Marvell projects net revenue of approximately $1.8 billion, with a margin of plus or minus 5%. The company expects a GAAP gross margin of around 50% and a non-GAAP gross margin of about 60%. Additionally, management anticipates adjusted EPS for the quarter to range between $0.51 and $0.64.
While reflecting on the Q3 performance, CEO Matt Murphy highlighted that "The exceptional performance in the third quarter, and our strong forecast for the fourth quarter, are primarily driven by our custom AI silicon programs, which are now in volume production, further augmented by robust ongoing demand from cloud customers for our market-leading interconnect products.”
Meanwhile, analysts tracking Marvell Technology expect the company’s earnings to climb 11.3% year over year to $0.89 per share in fiscal 2025 and rise another 121.4% to $1.97 per share in fiscal 2026.
Wall Street is highly bullish about MRVL stock, with a consensus “Strong Buy” rating overall. Of the 30 analysts offering recommendations, 26 advise a “Strong Buy,” two give a “Moderate Buy,” and the remaining two suggest a “Hold.”
The average analyst price target of $118.62 indicates only 4.5% potential upside from the current price levels, while the Street-high price target of $140 suggests that MRVL could rally as much as 23.3% from here.
Data Center Stock #2: Pure Storage
California-based Pure Storage (PSTG) is leading the way with the most advanced data storage platform in the industry, designed to store, manage, and protect data at any scale. By offering unmatched simplicity and flexibility, Pure Storage enables organizations to save time, money, and energy while optimizing their storage solutions. Whether for AI or archiving, Pure provides a seamless cloud experience with its unified Storage-as-a-Service platform, spanning on-premises, cloud, and hosted environments.
With a market cap of approximately $21.3 billion, shares of Pure Storage soared beyond the market, delivering wonderful gains of roughly 93% over the past year and 79.8% on a YTD basis.
Pure Storage revealed its stronger-than-expected fiscal 2025 Q3 earnings results on Dec. 3, which sparked a 22.1% surge in its shares in the next trading session. The company reported impressive revenue of $831.1 million, marking a 9% year-over-year increase and narrowly edging past Wall Street’s forecast figure. Its adjusted EPS of $0.50 crushed estimates by a solid 19.3%.
During the quarter, subscription services remained a key growth driver, with revenue soaring to $376.4 million, a 22% increase from the previous year. The company’s Subscription Annual Recurring Revenue (ARR) also saw impressive growth, rising 22% year over year to $1.6 billion. Meanwhile, Remaining Performance Obligations (RPO) surged 16% annually to $2.4 billion, signaling a strong pipeline and promising growth ahead.
Furthermore, the company demonstrated strong financial health with an operating cash flow of $97 million and a free cash flow of $35.2 million in Q3. With a solid cash position, it ended the quarter with a total of $1.6 billion in cash, cash equivalents, and marketable securities, ensuring ample liquidity to support future growth and strategic initiatives.
CFO Kevan Krysler highlighted that the company's strong Q3 performance surpassed expectations in both revenue and operating income. The CFO further added, "We remain focused on driving both near-term results and long-term value creation through disciplined investments and innovation that position Pure as the leader in transforming the data storage landscape."
For Q4 of fiscal 2025, Pure Storage is projecting revenue of $867 million, reflecting 9.7% year-over-year growth. Non-GAAP operating income is expected to reach $135 million, with a solid operating margin of 15.6%. Looking ahead to fiscal 2025, the company forecasts revenue of $3.15 billion, marking11.5% growth from the previous year. Non-GAAP operating income for the entire year is projected to hit $540 million, with an operating margin of 17%.
Analysts tracking Pure Storage expect the company’s earnings to climb 4.8% year-over-year to $0.44 per share in fiscal 2025 and rise another impressive 56.8% to $0.69 per share in fiscal 2026.
Overall, PSTG stock has a consensus “Moderate Buy” rating on Wall Street. Of the 21 analysts offering recommendations, 12 advise a “Strong Buy,” two give a “Moderate Buy,” six advocate a “Hold,” and the remaining one suggests a “Strong Sell.”
The average analyst price target of $73 indicates 12.5% potential upside from the current price levels, while the Street-high price target of $93 suggests that PSTG could rally as much as 43.3% from here.
Data Center Stock #3: Credo Technology Group
Grand Cayman-based Credo Technology Group Holding (CRDO) is revolutionizing the data infrastructure market with high-speed connectivity solutions designed to break bandwidth barriers on every wired connection. As data rates and bandwidth demands soar, Credo leads the way with secure, efficient solutions that enhance power, cost efficiency, and performance. Their innovations tackle system bandwidth bottlenecks while boosting power, security, and reliability.
Specializing in optical and electrical Ethernet applications, Credo's products serve the growing 100G, 200G, 400G, 800G, and emerging 1.6T port markets. Valued at $12.4 billion by market cap, CRDO stock, like MRVL and PSTG, has easily dwarfed the broader market’s healthy gains, posting a stellar 270% return over the past year and 245% on a YTD basis.
After the company dropped its fiscal 2025 Q2 earnings results on Dec. 2, which smashed Wall Street’s top and bottom-line estimates, shares of Credo rallied an astonishing 47.9% in the next trading session. The company achieved a record revenue of $72 million during the quarter, marking a notable 64% year-over-year jump. Adjusted EPS of $0.07 also reflected a dramatic improvement from the year-ago quarter’s adjusted EPS of $0.01 and exceeded estimates by a notable 34.6% margin.
Credo wrapped up the quarter on a high note, boasting a robust cash and short-term investment balance of $383 million, putting the company in a strong position for continued growth. Investors were particularly impressed by CEO Bill Brennan’s insights on the Q2 results. Brennan noted that the quarter marked Credo's “most successful to date,” driven by impressive performance across its three main product lines, with total product revenue reaching $69.1 million.
The CEO further added, “For the past few quarters, we have anticipated an inflection point in our revenues during the second half of fiscal 2025. I am pleased to share that this turning point has arrived, and we are experiencing even greater demand than initially projected, driven by AI deployments and deepening customer relationships.”
For Q3, management anticipates revenue to range between $115 million and $125 million, with non-GAAP gross margin expected between 61% and 63%. Additionally, operating expenses for the quarter are projected to land between $58.6 million and $60.6 million. Over the longer term, analysts tracking Credo expect the company’s profit to increase an astonishing 181.3% annually in fiscal 2025 and grow another stellar 369.2% to $0.61 per share in fiscal 2026.
Overall, Wall Street appears highly optimistic about CRDO stock, with a consensus “Strong Buy” rating. Of the nine analysts offering recommendations, eight advise a “Strong Buy,” and the remaining one suggests a “Moderate Buy.”
The average analyst price target of $74.44 indicates marginal potential upside from the current price levels, while the Street-high price target of $80 suggests that CRDO can still rally as much as 7.8% from here.
