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Big Tech stocks have experienced significant turbulence in recent months, driven largely by geopolitical tensions, tariff-related uncertainty, and broader macroeconomic headwinds. Still, despite these challenges, industry leaders like Amazon (AMZN) and Nvidia (NVDA) continue to reaffirm that the underlying demand for data centers remains robust. Data centers are foundational to the modern digital economy, supporting everything from e-commerce and streaming services to advanced AI applications.
Kevin Miller, vice president of global data centers at Amazon, said last week that the company’s data center plans have not changed significantly. “We continue to see very strong demand, and we’re looking both in the next couple of years as well as long term and seeing the numbers only going up,” he added. Josh Parker, Nvidia’s senior director of corporate sustainability, also noted that the chipmaker hasn’t observed any indications of a slowdown. In addition, Vertiv (VRT) CEO Giordano Albertazzi stated that the company has not seen any major pullback in its customers’ business plans.
As technology giants continue to double down on data center investments, here are three top-rated data center stocks: Applied Digital (APLD), Amazon (AMZN), and Equinix (EQIX). The companies are well-positioned to benefit from the surging demand for data centers. With that, let’s take a closer look!
Top-Rated Stock to Buy #1: Applied Digital
Initially established as a cryptocurrency mining solutions company, Applied Digital (APLD) has since transitioned into a digital infrastructure provider, offering Cloud and AI data center space to high-performance computing (HPC) customers. The company operates across three primary segments: Data Center Hosting, Cloud Services, and HPC Hosting Business. Its market cap currently stands at $1.1 billion.
Shares of the digital infrastructure company have slumped 38.6% on a year-to-date basis.
The company operates with a straightforward business model. It simply built or acquired large data centers, ensured they had reliable power, and then leased out rack space to AI and cloud companies that installed their own servers. With that, APLD operates more like a real estate company than a technology company. Notably, during the Q3 earnings call, the company’s management mentioned for the first time the possibility of transitioning into a real estate investment trust (REIT). Under this new strategy, the company has approved the sale of its cloud services segment, though it hasn't found any buyers yet.
Meanwhile, APLD is now fully focused on Ellendale, North Dakota, where it is constructing a massive data center designed to provide custom-built, AI-first infrastructure for hyperscale customers. However, the company has faced challenges in securing lease agreements with hyperscale customers for the data center. It is important to note that HPC hosting is a fiercely competitive market, dominated by established players such as CoreWeave (CRWV), CyrusOne, Equinix, Amazon, Microsoft (MSFT), and Google (GOOGL). During the Q3 earnings call, management said, “While securing our lease for our Ellendale campus is taking longer than expected, customer interest remains high.” There’s no doubt that deals of this magnitude take time to close, and I believe that any lease announcement would have a major impact on APLD stock.
Let’s now review the company’s latest quarterly results, released on April 14. Applied Digital’s total revenue grew 22.2% year-over-year to $52.92 million in FQ3, fueled by a 220% surge in the cloud services segment due to the deployment of additional GPU clusters. Although the growth in the cloud services segment might seem notable, it actually reflected a 36% sequential decline due to technical challenges in transitioning GPU capacity from single-tenant reserve contracts to a multi-tenant on-demand model. Also, revenue from the data center hosting segment declined 7% year-over-year to $35.2 million. With that, APLD’s top line missed Wall Street’s consensus by $9.99 million, triggering a nearly 36% post-earnings plunge.
In terms of profitability, the company posted adjusted loss per share of $0.08, beating expectations by $0.02. Notably, its adjusted EBITDA stood at $10 million, up 878% year-over-year. The cloud services segment continues to weigh heavily on the company’s profitability, so it wasn’t surprising when APLD announced plans to sell the entire business. Therefore, by divesting this business, the company could transition into a stable REIT poised to benefit from the long-term growth in the cloud, AI, and data center markets.
Analysts tracking the company expect its adjusted net loss to narrow by 23.66% year-over-year to $1.00 per share for fiscal 2025, while revenue is projected to advance 35.66% year-over-year to $224.63 million.
In terms of valuation, the company’s forward EV/Sales and Price/Sales ratios stand at 8.85x and 4.54x, respectively, both significantly higher than the sector median. However, this is typical for an early stage growth company. Moreover, once the company secures lease agreements for the Ellendale campus, it will likely support a further expansion of its valuation multiples.
Applied Digital stock has a consensus “Strong Buy” rating, with a mean target price of $10.05, which indicates a massive upside potential of 113.8% from the April 25 closing price. Out of the nine analysts covering the stock, eight recommend a “Strong Buy,” and one gives a “Moderate Buy” rating.
Top-Rated Stock to Buy #2: Amazon
Amazon (AMZN) stands as a global leader in e-commerce and cloud computing. The company operates a diverse business model, encompassing retail sales of consumer products through its online and physical stores, cloud services through AWS, and advertising and subscription offerings. It has a staggering market cap of $1.8 trillion.
Shares of the e-commerce and cloud services giant have dropped 14% YTD.
Last Monday, Wells Fargo published an investor note stating that Amazon had halted some of its data center leasing activities. However, Kevin Miller, vice president of global data centers at AWS, clarified in a LinkedIn post that the adjustment in the hyperscaler’s data center plans is simply “routine capacity management, and there haven’t been any recent fundamental changes in our expansion plans.” AWS continues to see “strong demand for both generative AI and foundational workloads,” he added. Notably, AWS operates 114 availability zones and has plans to add 12 more across 36 global regions, serving 245 countries and territories. Amazon’s strategic data center expansions are essential for driving future earnings growth and sustaining its leadership in AI and cloud infrastructure.
Now, let’s quickly review the company’s Q4 earnings results released in early February. Its total revenue advanced 10.5% year-over-year to $187.79 billion, beating expectations by $560 million. The North America and International segments’ revenue grew by 10% and 8% year-over-year, respectively, accounting for 85% of total revenue, while AWS revenue rose 19% year-over-year, making up the remaining 15%. Although e-commerce still accounts for the majority of Amazon’s sales, AWS will be crucial for driving the growth of Amazon’s operating profits. AWS leads the cloud industry, with a more than 30% market share, and is beginning to generate significant cash and profits for Amazon.
Meanwhile, Amazon generated $21.2 billion in total operating profits in Q4, with AWS contributing 50% of that amount despite accounting for only 15% of total revenue. AWS’s long-term growth is fueled by the ongoing shift of workloads from on-premise systems to cloud infrastructure. With just 20%-25% of IT workloads presently hosted in the cloud, there’s still significant growth potential remaining for all industry players. The cloud is also the primary reason behind Amazon’s plan to invest up to $100 billion in 2025 in AI-related infrastructure to support enterprises embracing AI-driven workflows. With that, AWS is poised to remain the key growth engine driving Amazon’s overall business in the future.
Amazon is set to report its Q1 earnings results this week. Management previously projected revenue growth of approximately 7% year-over-year to $153.25 billion. Notably, analysts tracking the company foresee a 19.47% year-over-year increase in its GAAP EPS to $1.35 for Q1, with revenue expected to grow 8.21% year-over-year to $155.08 billion. While investors will welcome Amazon’s Q1 earnings beat, the primary focus will shift to guidance and management’s commentary on how they expect the current tariff environment to affect the company’s key business segments.
In terms of valuation, AMZN’s forward P/E ratio (Non-GAAP) stands at 30.23x, well above the sector median of 14.31x. However, considering Amazon’s growth prospects, particularly for AWS, its valuation looks very appealing, especially with the P/E multiple currently hovering near an all-time low.
Wall Street analysts are overwhelmingly positive about Amazon’s future, as evidenced by a consensus “Strong Buy” rating. Out of the 52 analysts offering recommendations for the stock, 46 rate it as a “Strong Buy,” five give a “Moderate Buy” rating, and the remaining one advises holding. The mean price target for AMZN stock is $247.22, which is 30.8% above the April 25 closing price.
Top-Rated Stock to Buy #3: Equinix
With a market cap of $75 billion, Equinix (EQIX) is a leading provider of digital infrastructure services, specializing in data centers, connectivity, and digital real estate, and has more recently transitioned into a REIT. It operates 268 data centers located in various countries around the world. EQIX is among the largest publicly traded data center REITs in terms of market cap.
Shares of the digital infrastructure REIT have fallen 10.4% YTD.
Equinix’s business model focuses on delivering a wide range of data center solutions to a variety of clients, including cloud service providers, IT firms, content companies, and, to a lesser extent, financial institutions. In fact, the company operates as a digital landlord, owning data centers and providing a broad range of services to its clients, including operational support, physical and cybersecurity, and reliability improvements to ensure smooth operations. With recent assurances from executives at Amazon, Nvidia, and Vertiv about AI data center demand, the outlook for the company’s future appears promising.
In late March, Wolfe Research upgraded Equinix to “Outperform” from “Peer Perform” with a $978 price target, highlighting that its strong balance sheet would provide support during a downturn and that the data center REIT is “well-suited for retail inference.”
Equinix released its latest financial results in February. The company’s revenue grew 7.1% year-over-year to $2.26 billion, driven mainly by a strong growth in recurring revenue. Notably, about two-thirds of Equinix’s recurring revenue is derived from assets it owns. The Asia-Pacific region posted the strongest year-over-year revenue growth, with a 13% increase in revenues. However, the top-line figure fell short of Wall Street’s consensus by $10 million. EQIX posted an AFFO per share of $7.92, beating expectations by $5.18.
Meanwhile, in Q4 and 2024, the REIT achieved the strongest gross bookings performance in its 26-year history, supported by solid pricing dynamics and strong execution across the Americas, EMEA, and Asia-Pacific regions. This resulted in over 16,200 deals with more than 6,000 customers throughout 2024. Additionally, capital expenditures totaled around $1 billion in Q4, with about 65% of the CapEx budget directed toward the Americas, reflecting management’s confidence in continued strong demand growth for the REIT’s services in that market.
Looking ahead, management expects 2025 revenue to fall between $9.033 billion and $9.133 billion, with Q1 revenue projected between $2.191 billion and $2.231 billion. Notably, Equinix is scheduled to release its Q1 results on Wednesday, April 30. Analysts covering the REIT predict a 13.26% year-over-year increase in its FFO to $6.58 per share for Q1, while revenue is projected to rise 4.83% from the previous year to $2.23 billion.
In terms of valuation, EQIX trades at a forward Price/FFO ratio of 30.94x, which is higher than the sector median of 12.44x. While EQIX’s valuation might seem high at first glance, it’s important to note that the REIT boasts growth metrics that often surpass the sector median by more than 100%.
Like any other REIT, EQIX pays dividends. In February, it increased its quarterly dividend by 10% to $4.69 per share, resulting in a forward yield of 2.23%.
Wall Street analysts have a consensus rating of “Strong Buy” on Equinix stock, with an average target price of $1,021.19, which indicates solid upside potential of 21.8% from the stock’s April 25 close. Among the 27 analysts covering the stock, 24 recommend a “Strong Buy,” one rates it as a “Moderate Buy,” and two suggest holding.
