Core Insights - The global technology infrastructure is undergoing significant development, particularly in artificial intelligence (AI), leading to a substantial increase in data center construction [1] - The data center construction market is projected to grow from $240 billion in 2024 to $456 billion by 2030, while the AI server market could increase to $430 billion by 2033 [1] Company Analysis: Applied Digital - Applied Digital is a small company with $221 million in trailing-12-month revenue and a market cap of $2.2 billion, focusing on building and operating data centers [4] - The company has 286 megawatts of capacity for crypto mining at two locations in North Dakota, currently operating at full capacity [5] - Although not yet profitable, Applied Digital is expected to achieve profitability as new facilities open and revenue increases, with a new facility in Ellendale, North Dakota, scheduled for Q4 2025 [6] - A partnership with Macquarie Asset Management involves an investment of up to $5 billion to expand its Ellendale campus, allowing for over 2 gigawatts of data center capacity [7] - The potential sale of its cloud hosting business, which constitutes a third of its revenue, could enable Applied Digital to focus on its data center business and possibly transition to a data center real estate investment trust (REIT) [8] - Revenue grew by 22% year over year in Q1, indicating a positive outlook for the company [8] Company Analysis: Dell Technologies - Dell Technologies is a leading supplier of servers globally, with its server business expected to surpass its PC business in the coming years [9] - Revenue from infrastructure solutions, including AI-optimized servers, grew by 12% year over year in Q1, making up 44% of total revenue [10] - The server and networking revenue increased by 16%, with segment operating income rising by 36% compared to the previous year [10] - Order bookings for AI servers reached $12 billion last quarter, exceeding all shipments from the previous fiscal year, with a backlog of $14.4 billion [11] - Despite a total revenue growth of only 5% year over year, improving margins in the infrastructure segment led to a 17% increase in earnings per share [13] - The stock trades at a forward price-to-earnings (P/E) multiple of around 12.5, reflecting sluggish growth in the PC business but indicating potential for higher returns as the infrastructure business expands [12][14]
2 Brilliant Stocks to Profit from the AI Infrastructure Boom