VRT, ANET, EQIX - Trump's Stargate AI winners?

As news trickled out about President Trump’s announcement of a new $500 billion Stargate joint venture (JV) focused on artificial-intelligence infrastructure, some potential beneficiaries emerged.

Short-listed Stargate contributors Oracle, Nvidia, Microsoft and Softbank - involved in the initiative and already saw their stocks move higher, based on the enthusiasm alone.

Many less-obvious companies, spanning various sectors, also stand to gain as the government throws its support behind a bigger domestic AI-infrastructure buildout.

While some of these stocks rallied on Wed, 22 Jan 2025 following Trump’s official announcement of the Stargate JV, others could get a boost further down the road.

Real estate firm, Jones Lang Lasalle (JLL), VP of data-centre strategy, Sean Farney said:

• The Stargate project is a big dollar spend.

• It’s good to witness a focus on growing tech that has strategic value.

Below are some sectors and stocks (within the sector), to watch out.

Optical-network.

Networking stocks already made notable gains on Wednesday, with $Arista Networks(ANET)$ up +6.9% and Ciena Corp. (CIEN) up +7.0%.

Facts :

• Arista has a strong relationship with Microsoft (MSFT), that is involved in the initiative.

• Ciena supplies to both Microsoft and Oracle.

$Jefferies Financial Group Inc.(JEF)$, analyst George Notter believes:

• Arista can easily achieve its goal of $1.5 billion in AI data center sales in 2025. He thinks the company has a lot of opportunities to grow in this area.

• Ciena's wavelength-division-multiplexing technology, that could transmit a lot of data over a single fiber optic cable, could be used to connect Stargate’s AI data centres, located across many different locations.

Additionally, Notter’s note to clients also flagged out other US stocks as possible beneficiaries:

• Coherent Corp (COHR).

• Lumentum Holdings Inc. (LITE).

• Fabrinet (FN).

• Corning Inc (GLW).

Notes: The first 3 companies make transceiver sockets that are expected to have a place in Stargate project, while Corning makes data-center fiber and other fiber-connectivity products.

Data-center infrastructure.

America is home to about 50% of the world’s established data-center footprint.

At the same time, there’s also a global race to quickly build out this infrastructure, with global data-center capacity expected to grow 15% annually over the next few years. (see below)

Against that backdrop, $Vertiv Holdings LLC(VRT)$ was one of the hottest stocks in 2024.

The maker of data-center infrastructure has gotten off to a roaring start in 2025 as well, including with a +3.8% boost on Wed, 22 Jan 2025. (see below)

Evercore ISI, Analyst, Amit Daryanani reported in early January 2025:

• VRT stands out (in its market) because of its technologies at keeping data centers running cool.

• When dealing with high temperature GPUs, VRT is “far more advanced” than its competitors.

However with the emergence of Chinese AI model, DeepSeek its potential impact has caused US market to crater on Mon, 27 Jan 2025.

VRT was not spared either. After the knee-jerk reaction, US stocks are beginning to pick up the pieces. So is VRT. (see below)

• On Fri, 31 Jan 2025, VRT rose by +2.11% to end January 2025 at $117.02 (see above), off its 12 months peak of $153.49 (23 Jan 2025).

Alternatively, France’s Schneider Electric SE (OTC: SBGSF) also offers energy-management solutions. This could also be a consideration.

Data-center (DC) REITs

In contrast, shares of Digital Realty Trust Inc (DLR) and $Equinix(EQIX)$ fell fractionally on Wednesday, although they moved higher on Tuesday, in anticipation of Stargate’s official announcement.

In early January 2025, UBS, Analyst, John Hodulik reported that generative AI is increasing demand for data centers. This means that data center companies are in a better position because of ability to meet growing demand for data storage and processing.:

Case in point:

According to JLL’s Sean Farney :

• Tech companies are spending a lot more money, fortifying their “big” data centres.

• A recent report estimated the Top 10 companies, including Amazon, Meta Platform, and Google, are spending around $300 billion a year, up from $200 billion.

• Most of the leading companies are based in the US.

Memory suppliers

According to Sebastien Naji, Analyst, William Blair :

• Foresee Micron Technology Inc. (MU) and SK Hynix Inc. (000660) as possible winners from Stargate, as “memory is a critical bottleneck in AI data centers, particularly for inference use-cases.”

• Also called out Astera Labs Inc. (ALAB) that makes memory re-timers that are built into Nvidia servers.

• Besides AI technology, constructions of Stargate data centers will also increase demand for (i) electricity, (ii) cooling systems, and (iii) other industrial components,

When a company plans to spend $100 billion to build a new data center, experts said the total price tag to get it operational, including chips, servers etc…could easily run 3 to 5 times the construction budget.

Energy.

Patrick Wilson, who manages investments in real estate for CenterSquare Investment Management has noticed that data centres are getting larger in size.

It also means more electricity will be required during operations of these mega data centres, leading to the main challenge of energy.

Below chart shows that global energy demand by data centers will double by 2029, reaching 100 Gigawatts.

Wilson recently started investing in data centers.

This has led him to him to examine closely:

• US power grid.

• Land availability.

• Future energy capabilities.

Wilson’s discovery.

• 5 years ago, data centers used about 3% of the electricity generated in the US

• Now, they use closer to 5%.

• At the going rate, by 2030, data centers will use 10% or more of the electricity.

• Some analysts even suggesting 12% to 13%.

• While the US has abundance of natural gas and that could help meet the increased energy demand, along with renewable energy sources, the "best” solution discussed at energy conferences is nuclear power.

• However, building new nuclear power plants takes a long time, potentially more than 12 years.

• It is quite certain that US does not intend to fall behind in the AI-race, with its vast usage potentials in the fields of healthcare, agriculture and even national security.

• This as AI is set to become more integrated into our lives very quickly.

My viewpoints: (mine only)

Although this is a relatively short post, it quoted a lot of US listed stocks, some of them I have not come across prior.

However for VRT, it is a very different story. I have a 26 Nov 2024 post on it. (click here ! for details).

Besides the 5 main companies (Oracle, OpenAI, Softbank, UAE’s MGX and Microsoft) leading the Stargate AI data-centres , the other stocks listed above are companies that might benefit from the Stargate project.

Will the emergence of Chinese AI assistant - DeepSeek, has it rewrite America’s AI history and its development trajectory? For now, the downloaded app will have data stored in servers located in China. When this is resolved and data stays with US soil, will it be time for DeepSeek to IPO?

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• NVDA, MSFT, TSLA impacted by DeepSeek !

• NVDA cont'd to slide for another day ?

• Deepseek upsets MRVL, NVDA, AVGO and TSM.

• Do you think Vertiv Holdings is worth a second look ?

• Do you think the stocks mentioned will benefit from the supply chain support role to help Stargate AI project to fruition?

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