Data centers are among the most significant trends in artificial intelligence (AI). In the coming years, major tech companies will spend trillions erecting them in the U.S. and internationally. New massive projects are announced so often that it’s tough to keep up, but I’ll try. Here are some notable recent announcements:
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OpenAI, the creator of ChatGPT, announced The Stargate Project last month. The company and its partners plan to spend $500 billion (yup, billion with a “b”) over the next four years. Notably, Arm Holdings and Nvidia (NASDAQ: NVDA) will be “key technology partners,” according to OpenAI.
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xAI, founded by Elon Musk, built “Colossus” in Memphis, which houses 100,000 Nvidia GPUs. Musk stated plans to expand to 200,000 GPUs, and there are reports that it could one day utilize a million of them.
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Amazon plans to spend $150 billion on data centers in the coming years, including another $10 billion expanding its facilities in Ohio. At the same time, Alphabet and Meta also have multibillion-dollar ventures planned and underway.
Statista expects the data center market to rise rapidly, surpassing $600 billion before the end of this decade:
Here are two companies deeply involved in the industry that look like buys now.
Nvidia’s fiscal 2024 was an absolute revelation. Revenue grew 126% to $61 billion on the back of incredible data center numbers. Data center sales exploded by 217% to $48 billion. As tremendous as this was, it pales compared to fiscal 2025, which ended Jan. 31. Revenue totaled $91 billion, with $80 billion from data centers, and only three quarters have been reported. Another $37.5 billion is expected in the fourth quarter of fiscal 2025, bringing total sales to $128 billion — more than double fiscal 2024. The growth is astounding.
Nvidia’s high-powered graphic processing units (GPUs) are essential for AI data centers. The demand is so high that Nvidia cannot build them fast enough. Recently, there was a report that Chinese company DeepSeek built a generative AI model that rivals ChatGPT with only a couple thousand GPUs and just a few million dollars. This news sent shockwaves through the industry as investors contemplated whether this meant that big tech companies would need far fewer Nvidia chips.
However, investors shouldn’t abandon Nvidia over DeepSeek. Many industry experts believe DeepSeek exaggerated its claims and may actually have 50,000 Nvidia GPUs and spent $1.6 billion on them. The above mentioned shock sent the stock diving; this is an opportunity for long-term investors to purchase Nvidia for a reasonable valuation:
