Looking for a new way to play with artificial intelligence? These AI REIT stocks are worth a look

With the buzz surrounding AI, many of the obvious plays appeal Nvidia (NVDA) and Microsoft (MSFT) are now well extended by entries. But data center stocks offer an alternative way to approach the opportunity, with the likes of Iron Mountain (IRM) and Equinix (EQIX) near the points of purchase.


Data center REIT space could be a lucrative way to play the trend, according to Hoya Capital, which describes them as “the physical epicenter of AI.”

“Among the best-performing real estate sectors this year, the data center REIT’s rebound was fueled by reports of a ‘boom’ in demand for AI-focused data center chips,” the firm said in a statement. relationship. “Even before the Nvidia report, data center REITs were growing this year after earnings results showed improved pricing power and record occupancy rates.”

Data centers provide computing and storage resources that help process huge data sets for AI purposes.

According to Hoya, AI-accelerated demand should bring “sustained pricing power” to an industry that he says has long been burdened with nearly unlimited supply.

Iron mountain stock

Iron Mountain is near a flat basis buy point of 56.53, according to analysis by MarketSmith. This is a first stage, positive pattern.

Iron Mountain has made a name for itself in physical records storage and has moved into the data center space. It now has 21 operational data centers in 19 global markets.

Overall performance is strong, with the company holding an IBD Composite Rating of 93. Since the start of 2023, IRM stock is up approximately 14%. Its EPS rating is 83 out of 99.

The stock pays a quarterly dividend of 62 cents per share, for an annualized yield of 4.4%. This is better than the S&P 500’s average return of 1.57%.

Iron Mountain has already built a background in the AI ​​space, such as its work with Google Parent Alphabet (GOOGL) to provide customers with AI information about scanned documents.

Equinix bag

Equinix stock sits close to a base cup entry of 762.51. This is also a first stage base.

The EQIX is also currently far from its 50-day moving average. It is in the top 20% of stocks in terms of price performance over the past 12 months. It has gained more than 14% since the start of 2023.

Equinix is ​​the largest data center operator in the world. It is active in the Americas, Europe, the Middle East and the Asia-Pacific region. The company has 248 data centers around the world.

According to Morningstar analyst Matthew Dolgin, Equinix and rival Digital Realty are “heads and shoulders above any other company in size and breadth.”

“The Internet of Things, artificial intelligence, and other innovations that increase public demand for data and connectivity require more hardware and connections in Equinix’s highly connected data centers,” it said in a May 30 research note.

EQIX currently holds an IBD composite rating of 89. Big Money has been a net buyer of the stock recently, with its accumulation/distribution rating at B.

Equinix stock has a dividend yield of 1.8%.

Other AI REIT Securities

While these are two of the strongest looking prospects, a few other names are also close to the rumours.

Trust of digital reality (DLR) has broken a downtrend and is below a cup entry handle of 108.85. While it offers a 4.7% yield, its Composite Rating of 49 is less than ideal. Additionally, earnings have plummeted 81% this year.

Digital bridge (DBRG) is forming a cup base with a buy point of 16.45. But the company is projected to lose 64 cents a share in 2023. It holds a poor Composite Rating of 23.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.


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