In this article, we will look at the 7 Best Data Center Stocks That Are Cheaper Than the S&P 500.
On June 16, Dan Niles, Founder of Niles Investment Management, appeared on a CNBC Television interview to discuss the AI trade. He noted that last week, most of the hyperscalers, including Meta, Amazon, and Google, were down, while the market was up. Most of this sentiment downturn was due to huge capital expenditure guidance. However, investors who withdrew money from hyperscalers were investing in semiconductors, which big tech companies are investing in as well. Therefore, Dan explained that investors are buying stocks and sectors where the hyperscalers are spending the most.
Dan is bullish on the stock market in general and expects the S&P earnings to increase around 25% this year, driven by agentic AI. He believes SpaceX to be an additional player in the AI capital expenditure race. This is because out of the total $28.5 trillion addressable market of SpaceX, roughly $2.4 trillion is expected to be AI infrastructure. Similarly, the AI enterprise application market is expected to contribute around $22.7 trillion to the total addressable market of SpaceX. Dan noted that the valuation of SpaceX might get inflated before it finally settles down to a reasonable figure, as Russell and other indices add the name to their data.
If you are looking to buy data center stocks that are cheap, let’s take a look at the 7 Best Data Center Stocks That Are Cheaper Than the S&P 500.
Our Methodology
To curate the list of 7 Best Data Center Stocks That Are Cheaper Than the S&P 500, we first reviewed market commentary and valuation data from sources including J.P. Morgan and The Wall Street Journal to establish a benchmark for the S&P 500’s forward price-to-earnings ratio. As of the dates reviewed, the index traded at roughly 19x to 22.5x forward earnings, depending on the source and valuation methodology. Next, we used the Finviz stock screener to find data center stocks that are trading below the forward price to earnings range of the S&P 500 index. Lastly, we cross-checked the valuation metric for each stock from CNBC and Seeking Alpha and ranked the stocks in ascending order of the number of hedge fund holders.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points ().
7 Best Data Center Stocks That Are Cheaper Than the S&P 500
7. Super Micro Computer, Inc. (NASDAQ:SMCI)
Forward P/E Ratio: 10.58
Number of Hedge Fund Holders: 49
Super Micro Computer, Inc. (NASDAQ:SMCI) designs and manufactures high-performance servers, storage systems, and networking equipment, all of which are essential components of data centers. The stock currently trades at a forward price to earnings ratio significantly below the valuation multiple of around 25 for the S&P. As a result, Super Micro ranks as one of the Best Data Center Stocks That Are Cheaper Than the S&P 500.
Recently, on June 11, Wolfe Research initiated coverage of Super Micro Computer, Inc. (NASDAQ:SMCI) with a Hold rating and did not disclose any price targets. The firm noted that the key concern is legal risk as Co-founder Wally Liaw was indicted, and Wolfe flags the possibility of auditor BDO USA resigning or further leadership departures. Wolfe noted that while the legal risk can cause internal headwinds, the business looks healthy as the NVIDIA relationship remains intact and strong order backlog suggests that the consumer demand remains robust as well.
Super Micro Computer, Inc. (NASDAQ:SMCI) released its fiscal Q3 2026 earnings last month. During the quarter, the company reported $10.24 billion in revenue, below the expectations of $12.45 billion. On the bright side, the adjusted EPS of $0.84 topped the consensus of $0.62.
Management noted that the revenue fell short of expectations mainly due to delays in customer site readiness. Notably, the AI GPU-related revenue contributed more than 80% to the total, with more than 123% year-over-year growth. Looking ahead, management raised the full-year guidance and expects revenue in the range of $38.9 billion to $40.4 billion, despite near-term supply chain constraints.
Super Micro Computer Inc. (NASDAQ:SMCI) operates as a seller and developer of server and storage solutions based on modular and open-standard architecture across Europe, the United States, Asia, and internationally. It provides liquid and air-cooled AI servers; SuperStorage systems; embedded (5G/IoT/Edge) systems; SuperBlade, MicroBlade, FlexTwin, GrandTwin, and BigTwin blade and multi-node systems; Hyper, CloudDC, and WIO and rackmount systems; and MicroCloud server systems.
6. Dell Technologies Inc. (NYSE:DELL)
Forward P/E Ratio: 22.21
Number of Hedge Fund Holders: 72
Dell Technologies Inc. (NYSE:DELL) is considered a pure-play data center stock as its Infrastructure Solutions group sells PowerEdge servers and storage systems directly to data centers, enterprises, and cloud providers. It is also one of the Best Data Center Stocks That Are Cheaper Than the S&P 500.
The stock has gained more than 76% over the past 30 days, mainly due to record-breaking fiscal Q1 2027 earnings on May 29. During the quarter, Dell Technologies Inc. (NYSE:DELL) delivered record adjusted EPS of $5.24, exceeding the $2.96 consensus and revenue of $43.84 billion, significantly ahead of the expected $35.77 billion. Notably, the growth was driven by 757% year-over-year increase in AI server revenue, which reached $16.1 billion. Moreover, the company also ended the quarter with an AI server backlog of $51.3 billion.
Following the release on June 1, Truist raised the price target on the stock from $170 to $360, while maintaining a Hold rating. The firm highlighted exceptionally strong demand along with a tight supply environment. The firm noted that this combination suggests the company has more potential revenue than it can currently fulfill. Truist expects Q2 fiscal 2027 to be just as strong as Q1.
Dell Technologies Inc. (NYSE:DELL) provides servers, storage, networking, PCs, software, cloud, edge, security, and services for enterprise, public-sector, consumer, and data-center customers.
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