You can’t scroll through a financial news feed today without seeing a headline about a major market segment, be it tech or industrials, getting completely reshaped by artificial intelligence. And with the recent sell-off, AI is becoming even more intriguing.
“For anyone that has had cash on the sidelines or missed the AI trade, this is the perfect opportunity to enter into these names that have had historically high valuations,” says Alonso Munoz, chief investment officer at Hamilton Capital Partners. “We’re doubling down on our AI outlook and believe the froth is now washed out of the system.”
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If you’re seeking the clearest, most direct way to invest in the AI revolution, you need to look beyond the graphics processing unit (GPU) makers and go straight to the powerhouse infrastructure that makes AI possible: data centers.
Think of it this way: AI is the brain, and the data center is the nervous system. The explosive growth of AI has created an insatiable demand for powerful data centers.
“We always ask ourselves: Who are the leaders working with to acquire data centers, services (or) products?” Munoz says. “In other words, we are looking for the lateral opportunities, or for companies that will likely benefit from working with the AI powerhouses.”
Companies are increasing their data center spending so fast it’s difficult to keep up with current estimates. In fact, as we begin 2026, consensus estimates for capital expenditures by the “Magnificent Seven” and other top hyperscalers have been revised sharply higher. Investors can now expect these tech giants to pour upwards of $527 billion into AI and data center investments in fiscal 2026, according to Wall Street analysts. That’s a $62 billion increase from third-quarter estimates.
Looking at the long-term horizon, the Dell’Oro Group — an independent market research firm specializing in data center infrastructure — forecasts that global data center capital expenditure will reach a staggering $1.2 trillion by 2029. Liquid cooling alone — necessary for large-scale AI operations — is expected to generate $7 billion in revenue by 2029.
That kind of spending is bound to have huge knock-on effects on the U.S. and global economies. After all, building new data centers and upgrading old ones to handle AI involves the industrial sector, materials, utilities, energy, defense companies, real estate and, of course, the communications, information and technology sectors. Nearly the entire market is — directly or indirectly — benefiting from the ongoing data center boom.
Not just any data center stock, exchange-traded fund or real estate investment trust will do, however. Here are seven of the best data center stocks, ETFs and REITs to buy now:
| STOCK, ETF OR REIT | MARKET CAPITALIZATION | FORWARD DIVIDEND YIELD |
| Microsoft Corp. (ticker: MSFT) | $2.9 trillion | 0.9% |
| Broadcom Inc. (AVGO) | $1.5 trillion | 0.8% |
| Nvidia Corp. (NVDA) | $4.4 trillion | 0.02% |
| American Tower Corp. (AMT) | $87.4 billion | 3.7% |
| Vertiv Holdings Co. (VRT) | $102.1 billion | 0.1% |
| Global X Data Center & Digital Infrastructure ETF (DTCR) | $1.2 billion* | 1.4%** |
| Pacer Data and Digital Revolution ETF (TRFK) | $446.3 million* | 0.1%** |
*Total assets, rather than market capitalization, are listed for this fund.
**30-day SEC yield.
Microsoft Corp. (MSFT)
Software stocks have experienced a lull in performance of late, but the investment case for Microsoft remains strong, according to Dan Romanoff, Morningstar senior equity research analyst. He taps Microsoft as his top wide-moat picks among software stocks. “(Microsoft) has a fair value estimate of $600, as we think the firm should thrive regardless of AI,” he writes.
The company’s strength lies in its dominance of the hyperscale cloud market with Microsoft Azure and its leadership position in the burgeoning generative AI space through its partnership with OpenAI and its Copilot platforms.
Microsoft’s fundamental strength is powered by the scale and profitability of its cloud segment, which generates enormous revenue growth. This segment requires unprecedented capital expenditures to build out its global data center footprint to support the intense power and computing demands of AI models like GPT-4. So, by investing in Microsoft, you’re indirectly investing in the same value proposition provided by data centers.
Broadcom Inc. (AVGO)
Broadcom sits at the center of the AI-infrastructure boom by quietly dominating the plumbing that makes hyperscale data centers actually work. Broadcom is “a prolific generator of cash flow” with a long track record of acquiring businesses, streamlining them and turning them into engines of profit, according to William Kerwin, senior equity analyst for Morningstar.
After a first-quarter 2026 earnings report that beat guidance, largely thanks to $8.4 billion of sales from AI chips, Morningstar raised its fair value estimate to $500. “2027 guidance exceeded our expectations and implies rapid ramps for Anthropic and OpenAI,” Kerwin writes. “We’re confident in AI spending holding up over the next three years, and believe these chips are earnings-accretive regardless of debates over gross margin.”
Its networking chip business is the crown jewel. Kerwin calls it Broadcom’s “strongest” business and the backbone of its wide economic moat, thanks to best?in?class switching and routing chips that move data through AI clusters at blistering speeds. That position is only getting stronger as hyperscalers design their own custom AI accelerators to reduce reliance on other companies like Nvidia.
For investors, Broadcom isn’t just participating in the AI buildout; it’s supplying the connective tissue that makes the entire ecosystem possible.
Nvidia Corp. (NVDA)
Nvidia has become the gravitational center of the AI hardware universe. The firm recently agreed to invest $30 billion in OpenAI, which will use 2 gigawatts of AI training on Nvidia’s Vera Rubin platform. “We believe the market is baking even more conservatism into Nvidia’s shares today, even though there’s no indication of a slowdown in AI development,” writes Morningstar senior equity analyst Brian Colello.
Despite market jitters about a possible AI bubble, Colello reiterates a $240 fair value estimate, arguing that Nvidia’s revenue growth is accelerating and an AI bubble “does not appear imminent.” Revenue in the fiscal year 2026 was $215.9 billion, a 65% increase. The company also reported record data center quarterly revenue in the fourth quarter of $62.3 billion, 75% higher than in the previous year. For investors, Nvidia isn’t just riding the AI wave; it’s shaping the shoreline.
American Tower Corp. (AMT)
American Tower is the backbone of digital connectivity. While not strictly a data center REIT, it’s a leading independent owner of communication real estate. The company owns and operates nearly 150,000 wireless communications sites globally, including data center facilities. American Tower serves as the landlord, providing the physical space for mobile carriers to deploy their network equipment.
The company benefits from the highly attractive long-term, non-cancellable tenant leases that include built-in annual escalations in rates. This combination results in a remarkably predictable, inflation-resistant cash flow stream. The ongoing global rollout of 5G networks and the growing demand for edge computing, which brings processing data closer to the user, guarantee sustained demand for the company’s tower and fiber assets.
The company recently began repurchasing shares for the first time in several years. Michael Hodel, Morningstar director of communication services equity research, considers that move a good use of capital, given the current share price. “If the market opens up, American Tower has the balance sheet strength to buy assets, but we expect it to remain focused on internal growth and share repurchases for the time being,” Hodel writes.
Vertiv Holdings Co. (VRT)
Vertiv is the “picks and shovels” leader of the AI data center boom. With a market cap of $102 billion, the company specializes in the mission-critical power and thermal management systems that keep digital infrastructure running. AI clusters generate more heat and demand significantly more electricity than older, traditional servers. As such, Vertiv’s proprietary liquid cooling technologies and “grid-to-chip” solutions are becoming the industry standard for cooling high-performance GPUs like those from Nvidia.
By offering prefabricated modular solutions — essentially pre-built data centers — Vertiv allows hyperscalers to deploy capacity at the rapid pace required by generative AI. This is helping fuel strong revenue, and sales rose 26% in 2025. Operating profit also increased year over year by 33% over the fourth quarter.
With $15 billion in orders already lined up, investors aren’t left guessing about the company’s future; that massive backlog practically guarantees a steady stream of revenue into 2027.
Global X Data Center & Digital Infrastructure ETF (DTCR)
When investing in any new industry or hot sector, diversification is often the best approach. A single stock may have incredible returns one year, then stagnate or fall the next as it battles fierce competitors. Why put all your bets on one company or REIT, when you could invest in two dozen? This is what DTCR provides.
The data center ETF holds 25 stocks, although the bulk of its assets are in the top 10 names in its portfolio. You’ll also get professional management to ensure your portfolio keeps up with the ever-changing tides in the data center and AI industries. The downside is that the price of this diversification and professional management is a 0.5% expense ratio.
Don’t expect an entirely smooth ride, however. DTCR is still a high-risk and concentrated bet with a tendency toward more volatility than its peers. If you’re bullish on data centers and invested for the long haul, though, it definitely merits a look. Morningstar gives it five stars, but believes it will underperform a relevant index or most peers over the near term.
Pacer Data and Digital Revolution ETF (TRFK)
Another option for instant diversification with a hair less risk than DTCR is a data center and digital infrastructure ETF like TRFK. Due in large part to the data center boom, this fund is up over 37% over the past 12 months.
TRFK is designed to track the Pacer Data Transmission and Communication Revolution Index. To qualify for inclusion in the index, and by extension TRFK, companies must generate at least 50% of their revenue from the “use, manipulation, transmission or storage of data and the ancillary services that enable these processes.” In other words, this ETF invests in companies and technology that are central to the data center industry.
TRFK’s portfolio consists of 81 stocks with over 20% of assets in heavy-hitters Broadcom and Nvidia. It’s fairly top-heavy with 60% of total assets in the top 10 names. TRFK has an expense ratio of 0.49%, and has a modest 30-day SEC yield of 0.1%. Morningstar’s analysts give it five stars and a bronze badge, indicating they’re confident it will outperform a relevant index or most peers over a market cycle.
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7 Best Data Center Stocks, ETFs and REITs to Buy originally appeared on usnews.com
Update 03/19/26: This story was previously published at an earlier date and has been updated with new information.
