As the world races to adopt artificial intelligence, cloud platforms, and advanced analytics, one thing is becoming crystal clear: all this digital innovation needs a home. And that home is the data center.
While investors flood into the obvious AI names—like Nvidia, Microsoft, and Amazon—many are missing the infrastructure beneath it all. Data centers are the beating heart of digital transformation, and yet, some of the most promising data center stocks remain undervalued heading into 2025. If you’re looking for strong upside potential in a high-demand sector, now’s the time to discover the “hidden giants” of data infrastructure.
Why Data Centers Are More Critical Than Ever
AI workloads require immense computing power, low latency, and massive data storage capabilities. As large language models scale, enterprises are offloading more compute needs into the cloud—which flows directly through physical data centers. At the same time, the expansion of edge computing, 5G networks, autonomous vehicles, and IoT are pushing the need for more decentralized data infrastructure.
According to industry analysts, global data center capacity is expected to grow at a compound annual growth rate (CAGR) of over 10% through 2030. Yet even with this explosive demand, many data center-focused stocks are still trading at discounts relative to their growth potential and cash flow.
Why Wall Street Is Overlooking the Real Winners
The spotlight is often on the front-facing cloud providers and chipmakers, while the “landlords” behind the scenes get little love. Real estate investment trusts (REITs) and hybrid infrastructure companies that specialize in data center design, construction, and leasing don’t get the same headlines—but they’re quietly collecting recurring revenue from the most powerful tech companies in the world.
This disconnect between visibility and value presents a prime opportunity for investors. Many of these companies boast long-term contracts, mission-critical clients (think AWS, Google Cloud, and Meta), and solid dividend yields—but still trade at below-market valuations.
Undervalued Gem #1: Switch Inc. (SWCH)
Switch Inc., a Nevada-based company, is a standout. With its Tier 5 Platinum data centers and commitment to 100% renewable energy, Switch has positioned itself as a sustainability-forward infrastructure provider. Its high-efficiency cooling systems and proprietary modular designs have made it a favorite for hyperscale customers.
Despite its solid fundamentals and strong client base, Switch was historically underappreciated—until it was taken private in 2022. Now, investors are watching closely for signs of a re-IPO or acquisition activity. If it returns to the public markets, it could be a major upside story in 2025.
Undervalued Gem #2: Applied Digital (APLD)
Applied Digital may have started as a crypto-infrastructure play, but it has rapidly pivoted into AI and high-performance computing (HPC) colocation services. With data center campuses in North Dakota, Texas, and Nevada, APLD offers low-cost, high-efficiency environments ideal for AI training and cloud workloads.
The market has been slow to re-rate Applied Digital as a serious player in AI infrastructure—but that’s starting to change. As new contracts with cloud and tech companies roll in, the stock has room to grow beyond its previous valuation as a crypto-only operation.
Bonus Contenders With Breakout Potential
- Iron Mountain (IRM): Often viewed as a legacy records storage company, Iron Mountain has quietly built one of the fastest-growing data center platforms globally. Its hybrid model and long-term client relationships make it an underrated growth play.
- Aligned Data Centers (Private): With an emphasis on water and energy efficiency, Aligned is gaining traction among enterprise clients and could IPO soon.
- TierPoint (Private): Serving regional and mid-market companies with colocation and cloud services, TierPoint flies under the radar but serves a vital need.
- CyrusOne (CONE): Though now privately owned, it’s worth tracking for a potential return to public markets—it remains a key operator in global data center assets.
Conclusion: Data Infrastructure Is the New Oil
The data center sector is no longer just about storage—it’s about enabling the future of AI, automation, and global connectivity. As demand intensifies, those who control the infrastructure behind the cloud will reap outsized benefits.
The market has yet to fully price in this reality for many data center-focused companies. That gives forward-looking investors a unique opportunity to get in early on tomorrow’s digital landlords. Whether through niche REITs, HPC providers, or hybrid players expanding into AI infrastructure, the upside is real—and quietly accelerating.
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