The Data Center Build-Out Is Accelerating. Here Are 3 Stocks to Buy Beyond Chips.
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The Data Center Build-Out Is Accelerating. Here Are 3 Stocks to Buy Beyond Chips.
010 mins
Nvidia, the leading supplier of chips for data centers, reported a 92% year-over-year revenue increase in its data center segment last quarter. “The build-out of AI factories is accelerating,” chief financial officer Colette Kress said on the company’s earnings call in May.
For investors, Nvidia’s results point to a huge investment cycle underway to support more-advanced artificial intelligence (AI) workloads, particularly agentic AI. But chip companies are not the only way to profit from this opportunity. Companies meeting demand for fast connection speeds, AI cloud services, and power management could deliver big gains in the next five years.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Here are three stocks to consider right now.
Image source: Getty Images.
1. Astera Labs
Shares of Astera Labs (NASDAQ: ALAB) are up 357% over the past year. They could still hit new highs over the next several years because the company is supplying the high-speed networking hardware essential for moving data at lightning speeds among chips in a data center.
The company has expanded its product portfolio over the past three years, boosting its revenue. Its Scorpio smart fabric switches, introduced in 2024, made up 15% of total revenue in 2025.
Management’s product expansion strategy is also strengthening its competitive position. For example, its software platform, COSMOS, provides diagnostic services that become deeply integrated into customers’ systems, making it more costly to switch suppliers.
The stock looks expensive, trading at 134 times forward earnings estimates. But it’s also growing at high rates. Revenue nearly doubled year over year to $308 million in the first quarter. Analysts expect adjusted earnings to increase by 69% this year and continue growing at a high double-digit rate over the next few years.
The stock would take a hit if data center spending slowed. But in the long term, Astera Labs should benefit as data centers become more complex — with single computing racks featuring multiple chip types — and demand for networking suppliers should continue to grow, which is why the stock could still head higher through the end of the decade.
2. CoreWeave
CoreWeave (NASDAQ: CRWV) offers a cloud services platform optimized for graphics processing units (GPUs) that is tailored for generative AI workloads. It helps lower costs for clients who need AI computing capacity without having to build it all in-house.
Revenue more than doubled year over year in the first quarter, reaching almost $2.1 billion. CoreWeave has expanded its data center portfolio to more than 50, showing how efficiently it can navigate the complexity of power, cooling, components, and software to get a facility AI-ready within weeks. Its ability to convert infrastructure into revenue-generating cloud capacity quickly is why leading companies like OpenAI and Anthropic are using CoreWeave.
Customer concentration is a key risk. If some of its largest customers slowed spending, it would obviously hurt CoreWeave and the stock. But the company is diversifying, with financial services customers now representing 10% of its huge $100 billion revenue backlog.
That huge backlog also shows why the stock could have significant upside over the long term. Analysts expect revenue to reach nearly $40 billion by 2028. If the stock still trades around 10 times sales — still reasonable for a fast-growing AI cloud infrastructure provider — that would support a value well above its current $53 billion market cap.
3. Vertiv Holding
Vertiv Holding (NYSE: VRT) is a leading supplier of power management and cooling systems, which are increasingly in demand as chip density rises in AI data centers. Revenue growth has been strengthening over the past few years and accelerated to 30% year over year in the first quarter. Management expects further acceleration, with full-year guidance calling for revenue to increase 34% to $13.8 billion.
This is also a highly profitable company with room for margin expansion. Its extensive product portfolio and deep integration into customers’ operations create a strong competitive advantage, making it a hassle for customers to switch suppliers. This supports its long-term outlook for higher margins. The company is on track to lift its adjusted operating margin above 27% by 2030, driven by cost leverage, service growth, and operational execution.
Vertiv’s leadership in power and cooling makes it a solid stock to ride the data center boom. Analysts expect earnings to grow at an annualized rate of 32% over the next several years, which could support market-beating gains. That can support a high price-to-earnings multiple and fuel shareholder returns.
Considering the limited supply of electricity to energize data centers, AI companies will focus on making their data centers as power-efficient as possible. This could make Vertiv a great stock to hold for the next five years.
Should you buy stock in Astera Labs right now?
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John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Vertiv. The Motley Fool recommends Astera Labs. The Motley Fool has a disclosure policy.
