We recently compiled a list of the 10 best AI data center stocks. In this article, we’ll take a look at how Alphabet Inc. (NASDAQ:GOOG) stands compared to other AI data center stocks.
The AI data center industry is growing rapidly due to the increasing demand for artificial intelligence (AI) applications and the vast amount of computing power they require. AI data centers are specialized facilities designed to handle high-intensity AI workloads such as machine learning, natural language processing, and neural network training. These facilities integrate advanced hardware and software to efficiently process large-scale data, creating critical infrastructure for the global digital economy. Big tech companies are investing heavily in AI data centers. For example, Meta announced plans to invest $33 billion in data center expansion to support AI research and development. Google is also investing billions of dollars in AI infrastructure, with $3.3 billion in just one region of the United States. These investments highlight the importance of AI data centers in the broader technology ecosystem.
AI workloads require hardware that can process vast amounts of data quickly and efficiently. This need has led to the development of AI-specific chips such as GPUs (graphics processing units), TPUs (tensor processing units), and ASICs (application-specific integrated circuits). These chips are essential components of AI data centers.
To learn more about these trends, visit Goldman Sachs’ 10 Unsexy AI Stocks and Goldman Sachs’ 10 Hottest AI Stocks.
AI data centers are essential to technological advancement, but they consume enormous amounts of energy. According to the International Energy Agency, data centers around the world account for about 1% of global electricity demand, and this number is likely to increase significantly with the rise of AI. The cooling systems required to maintain optimal hardware performance further contribute to this energy demand. To address this, companies are increasingly focusing on building energy-efficient data centers. For example, Google implemented machine learning algorithms to reduce energy usage in its data centers by 30%.
The AI data center industry will continue to evolve as demand for AI-driven applications increases. Experts predict a significant shift to edge computing, where data centers are decentralized and located closer to the sources of data generation. This reduces latency and improves performance for real-time AI applications such as autonomous driving and smart cities. Additionally, integrating quantum computing into AI data centers could revolutionize the field. Quantum computers are ideal for AI and big data applications because they can process complex calculations at speeds that traditional computers cannot achieve. Companies like IBM and Google are already considering quantum technology in their AI research.
To learn more about these developments, visit BlackRock’s 30 Most Important AI Stocks and Beyond the Tech Giants: 35 Non-Technology AI Opportunities.
our methodology
In this article, we scoured multiple similar rankings to create an initial list of 20 stocks. We then ranked the top 10 based on hedge fund sentiment at the end of Q2 2024.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
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Alphabet Inc. (NASDAQ:GOOG)
Number of hedge fund holders: 165
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and operates the Internet search engine Google. The company has made multiple announcements regarding major investments in AI data centers around the world. In late September, the company pledged $1 billion to build a data center in Thailand. At the end of August, Google announced that it would invest $850 million to open data centers in Latin America. In addition to these, the company has committed to investing billions of dollars in building data centers in the UK, Singapore, the US and Malaysia. The company also used Arm designs to develop data center chips that deliver industry-leading performance and energy efficiency.
Overall, GOOG ranks #6 on our list of the best AI data center stocks to buy. While we appreciate GOOG’s potential as an investment, we believe some AI stocks have a better chance of delivering higher returns over shorter time periods. If you’re looking for AI stocks that are more promising than GOOG but trade at less than 5x earnings, check out our report on the cheapest AI stocks.
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Disclosure: None. This article was originally published on Insider Monkey.
