These 3 Data Center Stocks Are Top Picks for 2026

Top Data Center Stocks to Watch for 2026

As cloud computing and artificial intelligence (AI) continue to fuel unprecedented demand for data capacity and networking hardware, data center stocks have become increasingly prominent in investment portfolios. These companies often deliver reliable revenue streams, and their earnings can surge during periods of heavy capital investment by enterprise clients.

According to Barchart analyst ratings, three standout companies are poised for leadership in 2026:

• Nvidia (NVDA): Renowned for its GPUs and AI accelerators, Nvidia is a key supplier to modern data centers and is well-positioned to benefit from ongoing infrastructure investments.
• Amazon (AMZN): Through its Amazon Web Services (AWS) division, Amazon maintains a dominant presence in cloud computing, supported by consistent enterprise demand.
• Broadcom (AVGO): Broadcom provides essential networking chips and systems that connect large-scale data center racks, generating steady revenue from both software and semiconductors.

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Together, these companies provide broad exposure to the ongoing expansion of data center infrastructure, a trend that analysts anticipate will accelerate through 2026. Let’s take a closer look at each stock.

Nvidia: Leading the AI Hardware Revolution

Nvidia stands as the premier developer of GPUs and AI accelerators, powering cloud servers and AI applications globally. The company’s late 2025 financial results set new records, underscoring its dominance in the AI chip sector. With innovative architectures such as Blackwell and Rubin, along with a growing suite of software and models, Nvidia is at the forefront of the data center AI transformation.

Currently the world’s most valuable company with a market cap near $4.6 trillion, Nvidia’s shares soared during the AI boom but have since pulled back from their late-2025 highs amid concerns of an AI market bubble. After reaching a peak close to $212 in October 2025, the stock trades around $185 as of early January 2026, remaining relatively flat year-to-date.

From a valuation perspective, Nvidia is trading at lofty levels, with a trailing P/E ratio of about 48 and a price-to-cash flow multiple of 61. These figures reflect significant growth expectations, placing Nvidia’s valuation firmly in “bubble” territory due to its pivotal role in AI and data centers.

Nvidia’s Financial Momentum and Outlook

Nvidia continues to post remarkable growth, with third-quarter fiscal 2026 revenue reaching $57 billion—a 62% increase year-over-year—driven by record data center sales of $51.2 billion (up 66% YOY). Gross margins held steady at 73%. Over the first nine months, the company returned $37 billion to shareholders through buybacks and dividends. Management projects fourth-quarter revenue of approximately $65 billion, signaling ongoing strength. CEO Jensen Huang highlighted that “cloud GPUs are sold out” as AI demand intensifies.

Starting 2026, Nvidia made significant announcements at CES, including the introduction of Rubin, a highly integrated six-chip AI platform, and new AI models like Alpamayo for autonomous vehicles. These developments indicate Nvidia’s evolution from a chipmaker to a comprehensive AI ecosystem provider, with future growth closely tied to the AI sector’s trajectory.

Analysts remain optimistic about Nvidia’s long-term prospects, though they caution that much of the anticipated growth is already reflected in the stock price. Of the 48 analysts covering Nvidia, the consensus is a “Strong Buy,” with an average price target of $256—representing a potential 38% upside.

In summary, Nvidia offers high exposure to generative AI, with its advanced technology and product roadmap suggesting further expansion. However, investors must weigh whether its premium valuation is warranted.

Amazon: Powering Cloud and AI Expansion

Amazon, the world’s largest online retailer, is also a leader in cloud services through AWS. Its dominance in both e-commerce and cloud computing places Amazon at the center of the data center and AI surge. The company has ramped up investments in data center infrastructure and AI, developing custom chips and large-scale clusters to meet rising demand. This dual strength in retail and cloud makes Amazon a key player in the ongoing AI and data center boom.

With a market capitalization of $2.6 trillion, Amazon’s stock remained mostly stable throughout 2025, gaining about 10% over the past year. Since last spring, shares have climbed roughly 40% on the back of strong earnings, recently approaching their 52-week high as investor enthusiasm for AWS-driven growth returns.

Amazon’s valuation is also elevated, trading at about 31 times forward earnings—a level typically reserved for high-growth tech firms. This suggests investors expect rapid expansion from AWS and AI initiatives, even though Amazon’s core retail business usually commands lower multiples.

Amazon’s Performance and Strategic Investments

Amazon delivered robust third-quarter results, with sales rising 13% year-over-year to $180 billion and AWS revenue up 20% to $33 billion. Operating income was $17.4 billion (flat YOY), but after adjusting for one-time charges, normalized operating income reached $21.7 billion. Net income jumped to $21.2 billion, up from $15.3 billion, aided by a $9.5 billion investment gain from Anthropic. Operating cash flow over the trailing 12 months increased 16% to $130.7 billion, though free cash flow declined due to higher capital expenditures.

Amazon is aggressively expanding its AI and data center footprint. In late 2025, AWS committed up to $50 billion to enhance AI-focused cloud capacity for U.S. government agencies and announced a $15 billion investment in new Indiana data center campuses. CFO Brian Olsavsky noted that capital spending surpassed $100 billion in 2025, primarily for AWS, with high investment levels expected to continue in 2026.

Looking forward, Amazon’s growth will depend on continued adoption of cloud and AI technologies, as well as the strength of its e-commerce business. CEO Andy Jassy emphasized that AI is driving significant improvements across the company, with AWS growth accelerating to 20% year-over-year. Analysts anticipate ongoing momentum for AWS as more enterprises deploy AI workloads.

Wall Street remains optimistic about Amazon’s prospects, with analysts assigning a consensus “Strong Buy” rating and an average price target of $294.96—implying a 20% upside from current levels.

Broadcom: Enabling Data Center Connectivity

Broadcom is a major force in semiconductors and infrastructure software, producing custom ASIC chips and networking hardware widely used in data centers. Its products are integral to hyperscale cloud providers and telecommunications firms. The acquisition of VMware has further strengthened Broadcom’s position in data center virtualization and hybrid cloud environments.

Broadcom’s shares performed exceptionally well in 2025, climbing about 45% over the past year and closing near $343 on January 7, 2026. This surge reflects investor enthusiasm for Broadcom’s AI-driven business and robust cash generation.

Broadcom’s valuation is also on the higher side, trading at roughly 41 times forward earnings and about 1.2 times its P/E-to-growth ratio—well above industry averages. While the stock offers a modest dividend yield of 0.70%, its primary appeal lies in its growth potential.

Broadcom’s Financial Highlights and Outlook

Broadcom reported strong fourth-quarter results, with revenue reaching $18 billion—a 28% year-over-year increase. Earnings per share stood at $1.74, and CEO Hock Tan noted that AI-related demand is accelerating. AI semiconductor revenue grew 74% year-over-year, and first-quarter guidance calls for revenue of about $19.1 billion, up another 28% from the previous year. For fiscal 2025, Broadcom achieved $43 billion in adjusted EBITDA (a 35% YOY increase) and generated a record $26.9 billion in free cash flow.

Analysts are confident that Broadcom will continue to benefit from the expansion of data centers and the adoption of AI technologies. Management expects AI-driven sales to keep doubling, underscoring the company’s strong growth trajectory.

Among the 41 analysts covering Broadcom, the consensus is a “Strong Buy,” with an average price target of $456.20—suggesting a potential 37% upside.