Artificial intelligence (AI) has developed into much more than just a buzzword. With widespread applications across a range of industries, AI stocks have made investors massive wealth in the last couple of years. As the revolution moves full-steam ahead, the surrounding infrastructure supporting AI platforms is also expected to witness a boom in the upcoming years - and one critical cog in the AI ecosystem is data centers.
With projections calling for data center demand to double by 2030, market participants would be well-advised to have a closer look at the players in this space to identify potential winners. To that end, analysts over at Goldman Sachs (GS) are also quite bullish about the upside here. Estimating that about 47 GW of additional power generation capacity will be necessary to accommodate the growth in U.S. data center power demand by 2030, the firm projects that this will result in about $50 billion in capital investment.
Given the massive growth prospects for data center names, here are five top-rated stocks that Goldman expects to benefit from this megatrend.
#1: Sempra
Founded in 1998 and based out of San Diego, Sempra (SRE) is an energy infrastructure company that focuses on clean power, energy networks and LNG and net-zero solutions. Its business model revolves around infrastructure ownership and operation, LNG export and regasification, and renewable energy development. Its market cap currently stands at $46 billion.
SRE stock is down 2.4% on a YTD basis, and offers a dividend yield of 3.30%.
Overall, analysts have deemed the stock a “Strong Buy,” with a mean target price of $83.35, which denotes an upside potential of about 14.3% from current levels. Out of 16 analysts covering the stock, 11 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 4 have a “Hold” rating.
#2: nVent Electric
Founded in 2018 as a spinoff from Pentair (PNR), nVent Electric (NVT) designs, manufactures, and sells electrical connection and protection solutions for various industrial, commercial, and residential applications. Its key product categories include enclosures, connectors, cable management systems, and heat tracing solutions. Its market cap is currently $11.9 billion.
nVent Electric shares are up 28% on a YTD basis. The stock also offers a dividend yield of 1.01%.
Analysts have a consensus rating of “Moderate Buy” for NVT stock, with a mean target price of $81.60. This indicates an upside potential of roughly 7.5% from current levels. Out of 10 analysts covering the stock, 6 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 3 have a “Hold” rating.
#3: Xcel Energy
Based out of Minneapolis, Xcel Energy (XEL) operates as a regulated electric utility company, primarily engaged in electricity generation, transmission and distribution, and retail sales. Its market cap is currently at $29.88 billion.
XEL stock is down 12.4% on a YTD basis, and the stock offers a dividend yield of 3.92%.
Overall, analysts have an average rating of “Moderate Buy” for XEL stock, with a mean target price of $62.23 - indicating an upside potential of roughly 14.7% from current levels. Out of 14 analysts covering the stock, 7 have a “Strong Buy” rating and 7 have a “Hold” rating.
#4: First Solar
Founded in 1999, First Solar (FSLR) is a Tempe, Arizona-based leading manufacturer of thin-film solar panels, a technology known for its low cost and high efficiency. They primarily focus on designing and producing thin-film solar panels at their manufacturing facilities, as well as selling solar panels directly to project developers and utilities for large-scale solar power plants. Its market cap currently stands at $19.3 billion.
FSLR stock is up 11.2% on a YTD basis.
Overall, analysts consider the stock a “Strong Buy,” with a mean target price of $227.39. This denotes an upside potential of about 18.7% from current levels. Out of 30 analysts covering the stock, 24 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 5 have a “Hold” rating.
#5: Fluence Energy
Founded fairly recently - in 2017 - and based out of San Francisco, Fluence Energy (FLNC) is a leading provider of energy storage solutions, specifically focusing on energy storage systems (ESS) and software and services. While the ESS segment is engaged in designing manufacturing, and deploying grid-scale battery storage systems for various applications, the software segment develops software platforms to manage and optimize energy storage systems. Its market cap is currently $3.48 billion.
FLNC stock is off 12.4% on a YTD basis.
Overall, analysts have a rating of “Strong Buy” for FLNC, with a mean target price of $29.83. That suggests an expected upside potential of about 42.7% from current levels. Out of 23 analysts covering the stock, 17 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, 3 have a “Hold” rating, and 1 has a “Strong Sell” rating.
