The 4 Pure-Play Data Center Stocks on the Market

The demand for data centers is showing no signs of slowing. In this clip from “Real Talk” on Motley Fool Live, recorded on March 25, Motley Fool contributor Matt Frankel provides a rundown of data center stocks on the market.

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Matt Frankel: Starting from the top we have Equinix (NASDAQ: EQIX), which has a $64 billion market cap. One of the largest real estate stocks in the market. They have data centers all around the world, about 240 last I looked. They are considered the gold standard of data centers. There are other companies that have more, but theirs are considered the central hubs of the internet. A lot of other data centers are judged by how close they are physically to an Equinix property. So, Equinix is a big company. They continue to expand. We recently learned they’re buying four new data centers in Chile and Peru. They recently bought an African data center operator. I can’t talk after 12 noon by the way so I get tongue twisted a lot on these shows. Going down the line, we have Digital Realty (NYSE: DLR), which is, in my mind, one of the leaders as well. It’s significantly smaller than Equinix at a $39 billion market cap but still one of the largest real estate investment trusts in the market. Then, we have Switch (NYSE: SWCH), which is a newer company and it is not a real estate investment trust yet. I believe that’s in the works but you can talk about Switch a little bit. Switch is a $7 billion market cap. Then, you have Cyxtera (NASDAQ: CYXT), which recently went public through Starboard Value SPAC (NASDAQ: SVAC). It is one of the only SPAC IPOs I know that is up from its SPAC IPO price. A lot of them are not doing so well. It has a $2.2 billion market cap, not a real estate investment trust. Then, last but not least, there is Iron Mountain (NYSE: IRM) ticker symbol IRM, not a pure-play. Their big core business is record-keeping. They have a bunch of, essentially, storage facilities that are designed to store paper records. If your doctor needs to keep paper records on something for 15 years, they might go to an Iron Mountain facility to make sure those are safe and secure. They’re slowly getting into the data center space because they realize that paper records are not going to be a thing forever and they’re slowly pivoting their business over to that. Then, you have American Tower (NYSE: AMT), which is not merely a pure play, but they just bought a data center operator; $109 billion market cap, the first real estate investment trust that crossed the $100 billion threshold, and the largest REIT in the world. They are primarily a cell tower operator.

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Matthew Frankel, CFP® owns Cyxtera Technologies, Inc., Digital Realty Trust, and Iron Mountain. The Motley Fool owns and recommends American Tower, Cyxtera Technologies, Inc., Digital Realty Trust, Equinix, Iron Mountain, and Switch. The Motley Fool has a disclosure policy.

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