Here are My Top 10 Stock Picks that'll Heavily Benefit from the Demand for AI Compute Capacity
Demand for data center capacity is skyrocketing thanks to AI.
Here are my top 10 stock picks that'll heavily benefit from the demand for AI compute capacity: 🧵
- Owns and operates data centers.
- Its cloud is custom-built for AI workloads.
- Recently entered $17 billion deal with Microsoft.
The revenue is on track to exceed $1 billion this year, with the target connected capacity of 100MW.
The management aims for 1GW contracted capacity by the end of next year.
Even if it can achieve just 2GW capacity by 2030, it can generate up to $20 billion ARR at the current GPU/per hour rates.
A dark blue rectangular background with the white text "NEBIUS" in a bold, sans-serif font. The letter "N" has a unique design with a curved tail.
- Expanding from Bitcoin mining to AI-cloud capacity.
- It's building 75MW of new capacity for AI this year.
- It's planning to add another 2GW next year.
It has substantial experience in the data center business due to its Bitcoin mining businesses.
Bitcoin mining operations are also extremely profitable and work as a cash cow to fund the venture into the AI cloud.
An increasing Bitcoin price can offset its expenditures and enable it to fund data center buildout without using too much leverage.
It occupies a distinguished position among the neo-cloud providers as it isn't as dependent on external funding as the others.
A dark blue background with the word "IREN" in bold, green, uppercase letters, slightly angled as if on a tilted plane.
- It has 23 active data centers with 1.2GW capacity.
- Planning to grow the current installed capacity to 2GW.
- 47 more sites are currently under construction.
The company aims to reach 5GW contracted capacity by the end of next year.
Even if it can turn only 3GW of this into connected capacity by the end of 2026, it can generate $30 billion in revenue.
It recently announced skyrocketing bookings for its cloud platform and provided a cloud revenue guidance of $144 billion.
Though the stock reacted to that by jumping over 30%, it can still run another 30% if it can turn these bookings into real orders.
Image
- Currently has 470MW active capacity.
- Contracted power capacity is around 2.2GW.
- Nvidia will buy residual capacity up to $6.3 billion.
Coreweave is growing extremely fast, but there are two problems: The business model and customer concentration.
Its business model is highly leveraged. It builds the data centers once the customer signs an agreement and makes a down payment.
It uses this down payment to put in orders for hardware and finances the remaining amount through credit secured by the hardware itself, leading to big interest payments.
Second, Microsoft makes up 72% of its revenue. If Microsoft backs up, it'll struggle.
Still, the potential for growth is insane.
Image
- Data center builder and integrator.
- Reported triple-digit revenue growth this year.
- Cons are the low margins and customer concentration.
It procures the hardware and, in the name of its customers and integrates them into their facilities.
It's also working on expanding its on-site integration services, which are in demand because hyperscalers want faster build times to meet their capacity obligations.
It's a small and demand-driven business, but it has a lot of upside if the demand grows as the market expects.
- Operates natural gas pipelines.
- Transports gas across 44 US states.
- Building direct pipes to data-centers.
As the energy demand skyrockets due to data center expansion, utilities run gas turbines harder to meet the load and take the gas through the regional pipelines like ET's Oasis.
Aside from the surge in general demand, it also started to enter agreements to supply gas directly to data centers.
At 13 times earnings, it's a safe way to bet on the data center capacity expansion.
Image
- Leading provider of low-latency network switches.
- Benefits from increasing demand and GPU density.
- Its Ethernet fabrics are the best alternative to InfiniBand.
The management recently guided for 70% growth in AI product revenue for 2026.
It'll also benefit from the industry player's push to break InfiniBand's dominance in GPU racks designed for high AI workloads.
Image
8. $Perma-Pipe International Holdings, Inc.(PPIH)$
- Leader in pre-insulated piping and leak detection.
- Has a detection product suitable for data centers.
- Actively pursuing data center deals.
It isn't officially active in the data center business, but its leak detection and insulated piping technology is area perfect fit for AI data centers, given the wide use of liquid cooling.
Its managers are actively sharing on LinkedIn that they are pursuing AI data center deals in the US.
It's an asymmetric opportunity at 14 times earnings.
Even if the data-center thesis doesn't work, you get the leading leak detection and insulated piping company in the oil and gas space with a lot of backlog.
9. $Constellation Energy Corp(CEG)$
- Largest producer of 0-carbon energy in the US.
- Data center energy demand will double by 2030.
- Regulators are pressing to reduce carbon emissions.
Data center energy demand is increasing skyrockets, and it'll be a disaster to meet all the incremental demand using fossil fuels.
Thus, data center operators are increasingly turning to nuclear power to power their facilities.
Constellation already signed deals with Microsoft and Meta to power their data centers.
More of these deals will follow as the demand keeps growing.
10. $Galaxy Digital Holdings Ltd.(GLXY)$
- A leading institution in blockchain-DeFi operations.
- Pivoting its Bitcoin mining operation to AI data centers.
- Recently closed $1.4 billion in funding to support its AI pivot.
It has a data center named Helios in West Texas that it acquired in 2022 for Bitcoin mining.
It's now expanding Helios from 300MW to 800MW to provide AI cloud capacity. It plans to expand this facility to 2.2GW capacity.
It recently closed a deal with CRWV to supply 260MW capacity.
As it scales its operations, similar deals will likely follow.
For whom haven't open CBA can know more from below:
🏦 Open a CBA today and enjoy privileges of up to SGD 20,000 in trading limit with 0 commission. Trade SG, HK, US stocks as well as ETFs unlimitedly!
Find out more here：
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
