3 Stocks Powering Data Center Growth: The Overlooked AI Infrastructure Play

Applied Digital is a purpose-built AI data center operator - a company that designs, builds, and operates next-generation data center facilities specifically engineered for the power density and cooling requirements of AI compute workloads. This is a critical distinction from traditional co-location providers: Applied Digital's infrastructure is purpose-engineered for AI from the ground up, rather than retrofitted from legacy server farm designs. Its facilities are built to handle the extreme power requirements of NVIDIA Blackwell and similar high-density GPU clusters - rack densities that standard data centers simply cannot support without costly and time-consuming upgrades.

Applied Digital's business model centres on long-term, contracted revenue from hyperscalers and large AI training customers who need dedicated, purpose-built compute infrastructure that they do not want to own outright. The company serves as a capital intermediary - building the expensive physical infrastructure, securing power agreements, and providing the facility management layer, while its customers focus on the compute and software. This capital-asset-heavy model carries execution risk during construction phases but generates high-visibility, recurring revenue once facilities reach operational status.

The company's key competitive advantage is its focus on sourcing power in markets with abundant, low-cost electricity - often in regions with available grid capacity and proximity to renewable energy sources, which is increasingly important as data center operators face environmental scrutiny. Its ability to secure power agreements in underserved geographies, while hyperscalers struggle to find sites in saturated markets like Northern Virginia and Silicon Valley, makes Applied Digital a supplier of a genuinely scarce resource: shovel-ready, high-power, AI-ready data center capacity. Revenue grew substantially year-on-year in fiscal 2025, driven by completed facility ramp-ups and expanding customer commitments.

Pure Storage is an enterprise flash storage company that has emerged as one of the clearest beneficiaries of the AI training and inference buildout - and it remains one of the most overlooked names in the AI infrastructure conversation. The reason is straightforward: when investors think about what an AI data center requires, they naturally gravitate to GPUs and power infrastructure. Storage is the unglamorous plumbing that enables those GPUs to function. Yet the physics of AI training are unambiguous: a GPU cluster is only as productive as the speed at which data can be fed into it, and bottlenecked storage turns expensive compute into expensive idle compute.

Pure Storage's FlashBlade and FlashArray product lines are designed specifically for the high-throughput, low-latency data access requirements of AI training clusters. Its all-flash architecture delivers data to GPU clusters without the input-output bottlenecks created by traditional hard-disk-drive (HDD) storage - a bottleneck that becomes critical when training runs involve petabytes of data across thousands of GPUs running concurrently. The company has publicly highlighted that AI-related storage demand is already a meaningful driver of its business, with customers deploying Pure Storage arrays specifically to eliminate storage as a bottleneck in AI training pipelines.

What makes Pure Storage particularly compelling quantitatively is its financial profile. The company has demonstrated consistent revenue growth - exceeding 25% year-on-year in recent quarters - combined with improving gross margins as its software subscription layer, Evergreen, grows as a share of total revenue. Evergreen subscriptions generate recurring annual contract value that provides revenue visibility well beyond a single product cycle, and the subscription gross margins are substantially higher than hardware sales. This mix shift toward software is structurally improving the company's earnings quality over time, a factor that quantitative screens capture through rising EPS revision trends and improving profitability scores.

Johnson Controls is a 140-year-old industrial company whose primary business - building automation, HVAC systems, fire and security infrastructure - intersects directly with the data center boom through one critical technology: cooling. As AI rack power density has escalated from 5–15 kilowatts for traditional server racks to 50–120 kilowatts for the latest GPU cluster configurations, thermal management has emerged as a fundamental constraint on data center expansion. A data center that cannot adequately cool its compute is a data center that must throttle its GPUs - or risk hardware failure. Cooling, in this context, is not a background utility cost but a core enabling technology.

Johnson Controls supplies both traditional air-side cooling infrastructure and the advanced liquid cooling systems that AI data centers increasingly require. Liquid cooling - in which coolant is circulated directly past compute components rather than relying on air movement - is the only viable thermal management approach for the highest-density AI racks currently being deployed. JCI's portfolio spans chillers, precision air cooling, fluid dynamics systems, and the building automation software that orchestrates these systems in complex data center environments. Its OpenBlue digital platform provides the analytics and control layer that allows operators to optimise cooling efficiency, predict failures before they occur, and reduce power usage effectiveness (PUE) - a key operational metric for data center sustainability.

What makes Johnson Controls an interesting quantitative pick rather than simply a beneficiary of a long-term trend is its valuation context. Unlike Vertiv - whose stock has risen significantly and now trades at roughly 46 times forward earnings - Johnson Controls arrives at this data center growth story from a lower valuation starting point, with a large installed base of existing maintenance and upgrade contracts providing baseline revenue stability. The company's data center exposure is growing as a percentage of its overall building solutions business, creating a re-rating opportunity as the market recognises an industrial holding company increasingly operating as a critical data center infrastructure provider. Its Q3 2025 results and raised full-year guidance reflected strong order momentum tied specifically to AI-related data center construction projects.