The artificial intelligence (AI) boom is driving an unprecedented surge in data center demand. Every major tech advancement, whether it’s AI-powered applications, cloud computing, or streaming services, relies on massive data infrastructure to keep things running smoothly. Plus, with AI adoption skyrocketing, companies are racing to expand their digital operations, and data centers have become an essential piece of the puzzle, fueling a wave of growth that shows no signs of slowing down.

The numbers speak for themselves. Projections call for revenue in the data center market to reach a staggering $452.5 billion in 2025, with the U.S. alone contributing approximately $137.5 billion. And the momentum doesn’t stop there. Looking ahead to 2029, the industry is expected to surge to a whopping $624.1 billion, expanding at a steady 8.4% compound annual growth rate (CAGR) from 2025 to 2029.

This relentless growth underscores the pivotal role of data centers in the digital economy. So, with this explosive growth in mind, here are two standout data center stocks to consider this month for potential gains.

Data Center Stock #1: Amazon

Seattle-based Amazon (AMZN) may have started its journey as an e-commerce company, but today, it has also emerged as one of the biggest tech players with its hands in everything, including cloud computing, AI, and data centers. With Prime Video, Music, Gaming, and Twitch, it dominates the entertainment space, while its Amazon Web Services (AWS) division is a leading player in the booming demand for cloud solutions and AI-driven technologies.

Presently commanding a hefty market cap of around $2.4 trillion, shares of this mega-cap stock are up almost 34% over the past year, which surpasses the broader S&P 500 Index’s ($SPX) 20.6% return during the same stretch. The company’s momentum has only intensified over the last six months, with shares up nearly 40.8%, outpacing the broader market’s 16% return during the same period.

The e-commerce giant dropped its fiscal 2024 fourth-quarter earnings report earlier this month on Feb. 6, which came in above both Wall Street’s top- and bottom-line predictions. Net sales for the final quarter climbed 10% year over year to $187.8 billion and slightly topped Wall Street’s forecasted figure of $187.2 billion, thanks to a strong holiday retail season.

On the earnings side, EPS of $1.86 shot up a stunning 86% year over year, crushing Wall Street projections by a notable 22.4% margin. Amazon managed to ramp up its profits by trimming costs and capitalizing on the strength of its high-margin cloud business. The company saw its operating margin rise to 11.3% in the fourth quarter, marking a significant jump from just 7.8% in the year-ago quarter.

Taking a closer look at segment performance, Amazon's North American division delivered a solid 10% year-over-year growth, bringing in $115.6 billion in sales. Its international division also showed strength, with an 8% annual increase, totaling $43.4 billion. Meanwhile, despite posting a healthy 19% year-over-year growth in its AWS segment, reaching $28.8 billion, Amazon’s stock took a 4.1% hit on Feb. 7.

The decline was fueled by investor concerns over slower growth in the company’s cloud computing unit. Adding to the disappointment, the retail giant’s fiscal 2025 Q1 guidance came in lighter than expected, which overshadowed an otherwise solid Q4 performance. For Q1, management projects net sales to land between $151 billion and $155.5 billion, reflecting a 5% to 9% year-over-year growth.

Nevertheless, despite this recent volatility, Wall Street seems overwhelmingly optimistic about AMZN stock, with a consensus “Strong Buy” rating overall. Of the 49 analysts offering recommendations, 45 are firmly backing it with a “Strong Buy,” three advise a “Moderate Buy,” and only one gives it a “Hold.”

The average analyst price target of $258.57 indicates a 12.8% potential upside from the current price levels, while the Street-high price target of $306 suggests that AMZN could rally as much as 33.5% from here.

Data Center Stock #2: Applied Digital Corporation

Texas-based Applied Digital (APLD) is leading the charge in next-gen digital infrastructure. With a focus on high-performance computing (HPC) and AI, the company designs, develops, and operates cutting-edge solutions across North America to meet the growing demands of these rapidly evolving industries. Applied Digital’s market cap currently stands at approximately $1.7 billion.

The stock has far outpaced the broader market over the past year, posting an impressive 52% return. Even more remarkable is its 106% rally in just the past six months, easily dwarfing the broader market's modest double-digit gains during the same time frame.

Applied Digital revealed its fiscal 2025 second-quarter earnings results on Jan. 14, which painted a mixed picture. Revenue climbed a stunning 51% annually to $63.9 million, soaring beyond Street projections by roughly 3.7%. The strong performance was largely attributed to the ongoing expansion of the company’s Cloud Services business, driven by the deployment of additional GPU clusters in the latter part of the quarter.

During the quarter, Applied Digital saw a massive 523% increase in revenue from its Cloud Services segment, reaching $27.7 million, up from just $4.5 million a year earlier. However, despite the strong growth, the company reported a much wider-than-expected loss of $0.66 per share, marking a sharp decline from the $0.10 per share loss in the same period last year.

As of Nov. 30, Applied Digital had a solid $314.6 million in cash, cash equivalents, and restricted cash. On the flip side, the company also carried debt of around $479.6 million. 

Much like AMZN, Wall Street appears to be all in on APLD stock, with a consensus “Strong Buy” rating overall. Of the nine analysts offering recommendations, eight are giving it a solid “Strong Buy," while the remaining one suggests a “Moderate Buy.”

The average analyst price target of $12.44 indicates an impressive 59.7% potential upside from the current price levels. The Street-high price target of $20 suggests that APLD could rally as much as 156.7% from here.