Growing Demand for AI Infrastructure
The demand for AI data centers and servers is poised for substantial long-term growth. This surge is largely driven by heavy investments in artificial intelligence technology, prompting significant advancements in data center infrastructure.
Company Spotlight: Applied Digital
Applied Digital is a smaller data center operator with promising potential. With revenues of $221 million and a market cap of $2.2 billion, this Dallas-based company specializes in constructing and operating data centers designed for high-performance computing, positioning itself to capitalize on the AI infrastructure boom.
Financial Outlook and Growth Plans
Despite not yet being profitable, Applied Digital is anticipated to achieve profitability as revenue grows. The company plans to launch a new facility in Ellendale, North Dakota, by Q4 2025, alongside two other facilities in development. They have also partnered with Macquarie Asset Management for up to $5 billion to enhance its Ellendale campus.
Dell’s Rising AI Server Business
Dell Technologies, primarily recognized as a leading PC manufacturer, is also a major player in the global server market. The company is witnessing significant growth in its AI server segment, with a 12% yearly increase in revenue from its infrastructure solutions, which now comprise 44% of total revenue.
Strong Demand and Financial Performance
Order bookings for Dell’s AI servers reached an impressive $12 billion in the last quarter, surpassing its total shipments from the previous fiscal year. Although overall revenue increased only 5% year-over-year, notable earnings growth of 17% per share reflects the robust potential within the infrastructure segment.
Investment Considerations
Investors eyeing the AI infrastructure sector should consider both Applied Digital and Dell. While Applied Digital exhibits high volatility, Dell’s strong position in the market and efficient growth strategies present stable investment opportunities.
Final Thoughts
While the Motley Fool analyst team has highlighted other stocks as more favorable than Applied Digital, both companies provide unique avenues for investment in the growing AI infrastructure landscape. It’s crucial for prospective investors to conduct comprehensive research before making decisions.
