12 Great Data Center Stocks for Long-Term Gain

Data centers emerged as a specialty as the internet walked and then ran and then soared. Now, they're an essential part of our global infrastructure, surely as essential as highways and ships and aircraft.

Data center owners and operators serve billions of users large and small. They are adapting their physical footprints and technological capabilities to meet new demands for volume and applications, such as gaming, artificial intelligence, and the growth of e-commerce -- just for starters.

They can also make some mighty fine investments. Here are some to consider.

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Digital Realty (NYSE:DLR) is a real estate investment trust (REIT) that operates more than 280 data centers in 23 countries on six continents. Since its 2004 initial public offering (IPO), Digital Realty has provided a total return of 1,040%, turning a $10,000 investment into $114,500.

This Austin, Texas-based company has also raised its dividend for 19 straight years and now is yielding about 3.5% with a share price of about $136 and market cap of about $39 billion.

ALSO READ: Are REITs a Good Investment?

Cyxtera Technologies (NASDAQ:CYXT) provides retail co-location services and on-demand IT infrastructure through 61 data centers in the United States, Europe, India, Malaysia, and Japan.

This Coral Gables, Florida-based company was formed in 2017 and has only been publicly traded since July 30. But its stock price has jumped about 45% in that time, now trading at about $14 a share with a market cap of about $2.5 billion.

Equinix (NASDAQ:EQIX) operates a network of more than 220 data centers in 63 major metros worldwide. This REIT's stock has handily beaten the S&P 500 in total return over the past 10 years -- 460% to 298% -- turning a $10,000 investment then into $56,000 now.

Silicon Valley-based Equinix has a market cap of about $62 billion, has raised its dividend for seven straight years, and its stock is now yielding about 1.82% at a share price of about $685.

ALSO READ: 3 Really Good Reasons to Invest in Data Center REITs

Iron Mountain (NYSE:IRM) has been around since 1951 and made its name as a document storage, security, and shredding operation. Now, it's into data centers, too, among its 1,450 facilities in 50 countries.

Iron Mountain is a Boston-based REIT whose stock price has more than doubled in the past two years and is now yielding about 4.6% at a share price of about $54 and market cap of about $15.6 billion.

Cisco Systems (NASDAQ:CSCO) has been around since 1984 and has been an integral part of the internet infrastructure from the beginning. Data centers are among its vast lineup of products and services that also includes switching, routing, and wireless solutions.

Cisco went public in 1990 at a split-adjusted price of about six cents a share. This Silicon Valley powerhouse now has a market cap of about $189 billion and would have turned a $10,000 investment at IPO into a cool $8.2 million or so.

5 Stocks Under $49

Presented by Motley Fool Stock Advisor

We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Nvidia (NASDAQ:NVDA) isn't a data center owner. It's a major provider of software for them, including operating platforms geared toward supporting intensive data uses like gaming, deep learning, and artificial intelligence.

This Silicon Valley operation has been providing graphic user interfaces since 1997, and its stock has soared in the past couple of years, now trading at about $192 a share and giving it a market cap of about $480 billion. It does pay a dividend, but a yield of only about 0.1%, making this a growth stock for long-term consideration.

ALSO READ: Investing in Growth Stocks

DigitalBridge Group (NYSE:DBRG) is a Boca Raton, Florida-based REIT and private equity firm with a $35 billion portfolio of digital infrastructure assets such as mobile towers, small cell nodes, fiber lines, and data centers.

DigitalBridge recently partnered with an Australian private equity firm in a pending deal to pay about $11 billion for Switch, an owner-operator of data centers in Las Vegas, Atlanta, and Grand Rapids, Michigan. DigitalBridge stock is currently trading for about $5.70 a share with a market cap of about $3.2 billion.

American Tower (NYSE:AMT) is the world's largest owner-operator of mobile towers; as of this year, it now owns 27 data centers.

The recent completion of American Tower's acquisition of fellow REIT CoreSite Realty marks a move into further integration of digital infrastructure for this Boston-based outperformer that has beaten the S&P 500 in total return by 25% in the past five years.

With a market cap of about $122 billion, American Tower stock is trading for about $267 a share and yielding about 2.2% after raising its dividend annually for the past 13 years.

ALSO READ: Investing in Infrastructure REITs

SBA Communications (NASDAQ:SBAC) is the third-largest owner of cell towers in the United States and has bought data centers in Chicago and Jacksonville, Florida, as this REIT moves into edge computing, which refers to the emerging practice of deploying data storage and computing services at the site where the data is actually produced.

SBA stock has been a good long-term buy and hold, nearly doubling the total return of the S&P 500 over the past 10 years as its stock price has risen to about $332 a share with a market cap of about $36 billion.

Last but not least, gigantic Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) itself is a major owner and operator of data centers. Google currently has 23 data centers in 14 states and 10 other nations worldwide, with dozens more service access points, creating an operation that currently generates about 7% of the massive company's total revenues.

In just the past seven years since Google restructured as Alphabet, the company's stock has outpaced the S&P 500 by about 50% as its market cap grew to about $1.5 trillion, and there could well be more growth to come.

5 Stocks Under $49

Presented by Motley Fool Stock Advisor

We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Amazon (NASDAQ:AMZN) is not just the titan of e-commerce; Amazon Web Services (AWS) is one of the world's first and largest providers of cloud computing and storage.

AWS now boasts 108 direct connection locations in 26 regions that serve 245 countries and territories. Basically, all of us.

In the past 10 years alone, a $10,000 investment in Amazon stock would have blossomed into $120,000, tripling the S&P 500 over that span as the company's market cap grew to about $1.24 trillion.

ALSO READ: Better Buy: Apple vs. Amazon

Microsoft (NASDAQ:MSFT) operates more than 200 data centers through its Azure cloud computing and application service. The software and services giant has a client list for these services that numbers in the hundreds of thousands, including an estimated 85% of Fortune 500 companies.

Microsoft stock has been a legendary wealth-maker, turning a $10,000 stake when it went public in October 1986 to nearly $45 million for a company now with a market cap of just about $2 trillion.

The worldwide use of digital information is growing fast, and the business of providing the software and hardware to handle all that traffic -- along with the evolving applications themselves -- promises to be a profitable source of investment opportunity for years to come.

The operators discussed here provide a good place to start exploring your own opportunity in this space.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Marc Rapport has positions in Alphabet (A shares), Amazon, and Digital Realty Trust. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, American Tower, Cisco Systems, Cyxtera Technologies, Inc., Digital Realty Trust, Equinix, Iron Mountain, Microsoft, Nvidia, and Switch. The Motley Fool has a disclosure policy.