The boom in artificial intelligence (AI) has unleashed huge demand for data centers, which are the backbone of this technological revolution. And the scale of the expansion is extraordinary. Across North America, data centers are being built at such a rapid pace that growth is outpacing traditional strongholds. For years, Virginia has held the crown as the world’s largest data center market. But that dominance may soon change.
Texas is poised to overtake Virginia, according to a new report from JLL, which is describing the moment as a true “inflection point” for the industry. Numbers tell stories. Currently, about 64% of the 35 gigawatts of large-scale construction projects are being built outside so-called mature markets such as Virginia. At the same time, vacancy rates remain very tight. As of the end of 2025, the data center vacancy rate will be only 1%, remaining at an all-time low for the second consecutive year.
Andy Cvengros, executive managing director and co-head of the U.S. data center market at Jones Lang LaSalle, said: “The data center industry has officially entered a hyper-development phase.” He emphasized that two consecutive years of record-low vacancy rates effectively dispelled bubble concerns, especially considering that almost the entire construction pipeline is already occupied by investment-grade tenants. In fact, about 92% of the capacity currently under construction is pre-committed.
Additionally, JLL highlights another compelling figure. The top five hyperscalers plan to invest up to $710 billion in capital expenditures in 2026 alone to build the infrastructure needed to support the next wave of digital growth. Against this strong backdrop, we take a closer look at two of the top-rated stocks that appear well-positioned to benefit from the story of accelerating data center expansion.
Seattle-based Amazon ( AMZN ) may be best known for reinventing online shopping, but its evolution into a full-scale technology giant has been nothing short of remarkable. What started as an e-commerce disruptor has transformed into one deeply embedded in cloud computing, artificial intelligence, data centers and digital entertainment. Today, Amazon shapes the way people shop, stream, work and even build the next generation of technology.
The company has a large footprint in entertainment alone. From Prime Video and Amazon Music to gaming and Twitch, Amazon commands a sizable share of the global streaming and digital content market. Meanwhile, Amazon Web Services (AWS) is at the center of the cloud and artificial intelligence boom, providing the backbone infrastructure that powers startups, enterprises and multinational corporations. Amazon is investing heavily in artificial intelligence.
In late February, the company announced a multi-year strategic partnership with OpenAI aimed at accelerating artificial intelligence innovation for enterprises, startups and consumers around the world. As part of the agreement, Amazon will invest $50 billion in OpenAI, starting with $15 billion and an additional $35 billion in the coming months once certain conditions are met. But despite Amazon’s ambitious ambitions in artificial intelligence, its stock doesn’t yet fully reflect that bold vision.
In terms of market value, Amazon’s stock price is approximately US$2.3 trillion, and has fallen 9.8% so far in 2026, down -1.92% from last year. The main culprit behind the lackluster results is investor reaction to the company’s eye-popping $200 billion in capital spending forecasts for this year, a clear sign that Amazon is investing aggressively in artificial intelligence, data centers and robotics. By comparison, the broader S&P 500 Index ($SPX) is up modestly in 2026 and on course for a solid 15% gain in 2025.
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Amazon’s fiscal 2025 fourth-quarter earnings report released on February 5 was staggering, but it also triggered a cautious reaction from investors. The company reported a staggering revenue of $213.4 billion, up 14% year-over-year and far exceeding Wall Street expectations of $211.5 billion. The main driver of this growth was AWS, whose revenue surged 24% annually to $35.6 billion, highlighting the continued strength of cloud and artificial intelligence-related demand.
In addition, other business segments also achieved solid results. North American sales increased 10% year-on-year to US$127.1 billion, while the international market grew faster, growing 17% to US$50.7 billion. On the surface, this quarter showcased the sheer scale of Amazon’s operations across multiple geographies and divisions.
However, despite strong revenue, the stock immediately came under pressure, falling more than 5% in the following sessions. Investors are weighing a slight decline in earnings per share against the company’s massive capital spending plans. Quarterly earnings per share rose 4.8% year-over-year to $1.95, but were slightly below analysts’ expectations of $1.98.
What’s more, CEO Andy Jassy said it will significantly accelerate investment in artificial intelligence infrastructure. Amazon expects capital expenditures in 2026 to reach an eye-catching $200 billion. While some of this spending will support core retail operations and non-AI workloads, Jassy emphasized that the majority of the spending is aimed at expanding the generative AI stack, including new data centers and custom chips such as Trainium and Graviton.
In fact, Trainium and Graviton have combined annual revenue of more than $10 billion, and their annual revenue growth is growing at a triple-digit rate as demand for Amazon’s custom chips accelerates. Looking ahead, Amazon expects revenue in the first quarter of 2026 to be between $173.5 billion and $178.5 billion, an increase of 11% to 15%. Operating income is expected to decline by $16.5 billion to $21.5 billion, compared with $18.4 billion in the first quarter of 2025.
Even with the recent volatility in stock prices, Wall Street’s faith hasn’t wavered. Amazon has an overall “Strong Buy” consensus rating, with 49 out of 57 analysts calling it a “Strong Buy,” 5 analysts giving it a “Moderate Buy” rating and just 3 analysts giving it a “Hold” rating. The $285.65 average price target implies roughly 37.5% upside potential, while the Wall Street-high price target of $360 suggests shares could surge 73% from current levels.
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California-based Broadcom (AVGO) is a major player in the global technology sector, developing semiconductors and infrastructure software that power many of today’s most demanding digital systems. Its products are used in data centers, network equipment, broadband services, wireless communications, storage platforms and enterprise software environments that form the backbone of modern connectivity and cloud computing.
Broadcom is increasingly becoming a core player in the construction of artificial intelligence infrastructure. By 2026, a large part of its growth will be driven by custom AI chips and high-speed network components that connect thousands of GPUs within large-scale AI clusters. With a market capitalization of approximately $1.5 trillion, Broadcom remains one of the largest players in the semiconductor space.
Still, the stock has not been immune to broader tech sector volatility, falling about 8.86% so far in 2026 as macro and tech headwinds weigh on sentiment. However, taking a step back, the long-term trajectory is still worth noting. Over the past year, Broadcom’s stock price has soared approximately 58.16%, easily exceeding the double-digit gains of the broader market during the same period.
Broadcom lifted the curtain on an impressive fourth-quarter fiscal 2025 earnings report on December 11, with both revenue and profit exceeding Wall Street expectations. During the quarter, the chip giant achieved record quarterly revenue of $18.02 billion, a year-over-year increase of 28%, easily exceeding the consensus estimate of $17.5 billion.
The advantage was driven largely by a massive 74% jump in AI-related semiconductor revenue, underscoring Broadcom’s position as a major beneficiary of the massive capital expenditures underway by hyperscale cloud providers. Digging deeper into the numbers, semiconductor solutions revenue grew 35% year over year to $11.1 billion, while infrastructure software revenue grew 19% year over year to nearly $7 billion.
Profitability is equally impressive, underscoring the company’s high-margin operating model. Broadcom reported non-GAAP earnings per share of $1.95, a year-over-year increase of 37%, higher than the market consensus of $1.87. Adjusted EBITDA for the quarter increased 34% year over year to $12.2 billion. Looking ahead to the first quarter, with results expected to be released after the market close on Wednesday, March 4, the momentum appears set to continue.
In the upcoming quarter, AI semiconductor revenue is expected to double year over year to $8.2 billion, driven by continued demand for custom AI accelerators and Ethernet AI switches. Additionally, the chipmaker expects total revenue of approximately $19.1 billion, with adjusted EBITDA reaching 67% of revenue.
Overall, Wall Street’s confidence in Broadcom remains firm. The stock has a consensus “Strong Buy” rating, reflecting firm belief in its long-term prospects. Of the 43 analysts covering the company, 38 rate it a “Strong Buy,” three recommend a “Moderate Buy,” and only two recommend a “Hold” on the stock. The upside suggested by the price target is also worth noting.
The $449 average target suggests potential gains of around 42.7%, while the Street’s top estimate of $535 suggests shares could rise 70% from current levels.
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On the date of publication, Anushka Mukherji did not hold (either directly or indirectly) any securities mentioned in this article. All information and data in this article are for reference only. This article was originally published on Barchart.com
