Top 3 data center stocks to buy as BlackRock nears deal to buy Aligned

BlackRock's Global Infrastructure Partners is reportedly nearing a $40 billion acquisition of Aligned Data Centers, signaling significant investment and demand within the data center sector, largely fueled by AI growth. This development underscores the robust outlook for companies like IREN, which is rapidly expanding its AI cloud capacity, Iron Mountain, projecting substantial data center revenue growth, and CoreWeave, actively securing major AI infrastructure deals and expanding its footprint.

Analysis

The data center sector is experiencing a period of significant capital investment and valuation uplift, highlighted by the reported $40 billion valuation for Aligned Data Centers in its pending acquisition by BlackRock's Global Infrastructure Partners. This transaction serves as a strong private market signal, reinforcing the bullish outlook for computing infrastructure driven by burgeoning AI-related demand, which Citigroup analysts project could stimulate over $2.8 trillion in spending by 2029. This secular trend is directly benefiting a range of companies, including those executing strategic pivots. IREN, for example, has rapidly shifted from Bitcoin mining to AI cloud services, investing $674 million to expand its GPU fleet and projecting a $500 million annualized revenue run rate (ARR) for its first quarter after AI cloud revenue doubled to $7 million in the prior quarter. CoreWeave is on a similar high-growth trajectory, securing a $14 billion deal with Meta Platforms and targeting revenue of $10.8 billion next year. Meanwhile, established diversified players like Iron Mountain (IRM) are also capturing significant upside, with its data center segment growth projected at 30%, contributing to an expected group revenue of over $6.8 billion for the current year.

Key Decisions for Investors

• The $40 billion private market valuation for Aligned Data Centers provides a new, elevated benchmark, warranting a review of valuation models for publicly traded data center peers and REITs with significant AI exposure.
• For high-growth opportunities, monitor the execution of firms like IREN and CoreWeave on their pivot to AI cloud, focusing on their ability to meet aggressive revenue targets, such as IREN's $500 million ARR projection, as proof of concept.
• Consider established players like Iron Mountain (IRM) for a more balanced risk-reward profile, as its legacy business offers stability while the data center segment provides direct participation in the secular AI growth trend.
• Given the aggressive GPU acquisitions mentioned, access to high-performance computing hardware from vendors like NVIDIA and AMD is a critical bottleneck and competitive advantage, making supply chain strength a key diligence item when assessing companies in this space.