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Why These 15 Data Center Stocks Are Plunging In 2025

Why These 15 Data Center Stocks Are Plunging In 2025

  • 17.03.2025 15:35
  • insidermonkey.com
  • Keywords: danger, danger

Data center stocks are plunging in 2025 due to shifting investor sentiment, tariff fears, and weaker economic outlook. Companies like AMD and Dell have been hit hard as demand for their products falters and earnings fall short of expectations.

Microsoft ReportsCPTsentiment_dissatisfiedDELLsentiment_dissatisfied

Estimated market influence

AMD

AMD

Negativesentiment_dissatisfied
Analyst rating: Buy

Advanced Micro Devices Inc (NASDAQ:AMD) is a semiconductor company whose chips are widely used in data centers. The stock is down significantly so far in 2025, primarily due to the broad-based decline in AI and semiconductor companies, though there are some internal factors as well.

Dell Technologies

Dell Technologies

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Dell Technologies Inc (NYSE:DELL) was previously seen as a laptop company, but these days, it is increasingly becoming involved in cloud computing and data centers. The stock is down significantly so far in 2025 as Dell’s fiscal year 2026 revenue forecast of $101 billion to $105 billion fell short of analysts’ consensus expectations of $103.81 billion.

Context

Analysis of Data Center Stocks Plunging in 2025

Market Overview

  • Stock Performance: Data center stocks experienced significant declines in early 2025, with many stocks falling sharply due to market sentiment shifts.
  • Investor Sentiment: Investors moved away from "pick-and-shovel" plays during the rally, leading to a bearish trend in the sector.

Key Factors Driving Declines

  1. Hyperscaler Contracts:
    • Microsoft canceled two data center contracts, impacting investor confidence.
  2. Economic Concerns:
    • Tariff fears and negative GDP outlook weighed on the sector.
  3. AI and Semiconductor Challenges:
    • Slower-than-expected AI chip sales and revenue shortfalls in semiconductor companies contributed to declines.

Company Analysis

15. Advanced Micro Devices Inc (NASDAQ:AMD)

  • Hedge Fund Holders: 96 in Q4 2024.
  • Revenue:
    • Q4 2024 data center revenue: $3.86 billion (up 69% YoY).
    • Missed analyst expectations of $4.14 billion.
  • Gaming Revenue: Down 59% YoY in Q4 2024.
  • Embedded Segment Revenue: Declined by 13% YoY in Q4 2024.
  • Stock Performance:
    • YTD 2025 decline: 16.41%.
    • Consensus price target: $155.14 (53.65% upside potential).

14. Dell Technologies Inc (NYSE:DELL)

  • Hedge Fund Holders: 63 in Q4 2024.
  • Revenue Outlook:
    • Fiscal year 2026 revenue forecast: $101–$105 billion (fell short of analyst expectations of $103.81 billion).
    • Q1 2025 revenue projection: $22.5–$23.5 billion (below analyst estimate of $23.59 billion).
  • Market Challenges:
    • Slowing demand for consumer electronics and unfavorable macroeconomic conditions.
  • Stock Performance:
    • YTD 2025 decline: 16.65%.
    • Consensus price target: $141.24 (47.49% upside potential).

Market Implications

  • AI and Semiconductor Impact: The broader AI sector's underperformance and semiconductor revenue shortfalls are key drivers of the declines.
  • Hyperscaler Dynamics: Contract cancellations by hyperscalers like Microsoft have created uncertainty in the market.
  • Macroeconomic Risks: Tariff fears and negative GDP outlooks are contributing to investor caution.

Competitive Landscape

  • Shift in Focus: Companies like Dell are increasingly focusing on cloud computing, but slower demand for PCs is creating headwinds.
  • Semiconductor Challenges: AMD's reliance on AI revenue growth has led to investor concerns over missed expectations.

Long-Term Considerations

  • Regulatory and Economic Risks: Tariff policies and macroeconomic conditions will remain critical factors in the sector's performance.
  • Strategic Adjustments: Companies may need to adapt their strategies, particularly in gaming and embedded markets, to mitigate risks.

This analysis highlights the significant challenges facing data center stocks in early 2025, driven by market sentiment, economic concerns, and sector-specific issues.