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3 Semiconductor Stocks to Buy Amid Rising Data Center Demand
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As the digital era continues to evolve, data centers stand at the heart of technological advancement, powering everything from cloud computing to artificial intelligence (AI).
In 2025, the growing demand for data centers will be fueled by advancements in AI, cloud computing and the need for more efficient infrastructure. This surge is driving key trends, such as hyperscale data centers, liquid cooling, edge computing, and a heightened focus on sustainability and energy efficiency.
Per the Fortune Business Insight report, the global data center market is projected to grow from USD 269.79 billion in 2025 to USD 584.86 billion by 2032, seeing a CAGR of 11.7%, reflecting the sector's robust growth, driven by increasing data storage and processing needs.
Semiconductor companies, including Credo Technology (CRDO - Free Report) , Broadcom (AVGO - Free Report) and Marvell Technology (MRVL - Free Report) , are likely to be among the key beneficiaries of this trend, as semiconductors are the foundational components of the hardware that powers data centers.
Data Center Demand to Aid Semiconductor Industry Prospects
The semiconductor industry is poised to benefit significantly from the increasing data center market in 2025, driven by the surge in AI and high-performance computing workloads leading to the rising demand for high-performance chips, particularly Graphics Processing Units (GPUs) and memory like High Bandwidth Memory (HBM).
As AI models grow more complex, the need for faster processing and efficient data storage has made GPUs and HBM crucial components. GPUs enable parallel processing for machine learning and deep learning tasks, while HBM provides the high-speed memory needed to handle massive datasets. This trend is expected to continue as AI applications become increasingly central to business and technological innovation.
Improvements in DRAM and NAND pricing will act as tailwinds for semiconductor stocks catering to the memory market.
The semiconductor industry is expected to continue its growth trajectory in 2025, driven by strong demand for AI and data center technologies, as well as increasing chip demand across various sectors. According to the Semiconductor Industry Association, global semiconductor sales reached $56.5 billion in January 2025, marking a 17.9% increase from $47.9 billion in January 2024. The global semiconductor market is projected to maintain its upward momentum, with sales anticipated to reach $697 billion in 2025.
Considering the immense growth prospects amid the rising data center demand, it is prudent for investors to look for fundamentally strong semiconductor stocks that are poised to benefit from this trend. Here, we are discussing three aforementioned stocks — CRDO, MRVL and AVGO — that look promising.
CRDO’s AEC Growth Drives Market Expansion in Data Centers
Credo Technology is gaining a strong market presence in both Ethernet and Active Electrical Cables (AECs) solutions specialized for data centers. AEC products experienced triple-digit sequential growth in the third quarter of fiscal 2025, driven by its increasing adoption in the data center market.
The demand for AECs grew as they proved to be more reliable than laser-based optical solutions, with ZeroFlap AECs offering more than 100 times better reliability than rack-to-rack solutions.
This made AECs an increasingly attractive option for data center applications, contributing to the new expansion of AEC usage and solidifying this Zacks Rank #1 (Strong Buy) company’s market position. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Credo Technology’s 2025 earnings is pegged at 63 cents per share, revised upward by 26% over the past 30 days. CRDO has skyrocketed 100.2% in the trailing 12 months compared with SPDR S&P Semiconductor ETF’s (XSD - Free Report) decline of 8.6%.
Credo Technology Group Holding Ltd. Price and Consensus
Broadcom Boosts AI Data Centers With High-Speed Solutions
Broadcom is capitalizing on the growing investments in AI data centers, solidifying its role as a key player in the evolving data center market.
This Zacks Rank #2 (Buy) company recently launched the Sian3 and Sian2M high-speed networking chips for AI data centers, with Sian3 utilizing advanced 3-nanometer process technology for over 20% power reduction in optical modules. At the same time, Sian2M enhances power efficiency over multi-mode fiber to meet the growing demand for high-bandwidth connectivity in AI and ML clusters.
Broadcom’s recent introduction of PCIe Gen 6 technology, tested with Micron and Teledyne LeCroy, enhances AI data center performance with advanced telemetry and diagnostics through its Interoperability Development Platform.
The company’s consensus mark for 2025 earnings is pegged at $6.56 per share, which has increased 3.9% over the past 30 days. Broadcom has rallied 29.8% in the trailing 12 months and outperformed the SPDR S&P Semiconductor ETF.
Marvell Drives AI Data Centers With High-Speed Solutions
Marvell Technology is capitalizing on robust demand in the data center market, offering solutions like pulse amplitude modulation (PAM) chips, digital signal processors, silicon photonics and laser drivers that enhance data center communication.
The Zacks Rank #2 company’s networking solutions, like PAM products and ZR electro-optics, are gaining traction as data centers are becoming increasingly fundamental for AI due to the massive computing power, storage and networking capabilities required to train and deploy AI models efficiently. Its leadership in AI-driven data center infrastructure, custom silicon and high-speed networking has been noteworthy.
Further strengthening its innovation edge, Marvell Technology partnered with TeraHop to demonstrate the industry’s first end-to-end PCIe Gen 6 over optics at OFC 2025, showcasing PCIe’s extended reach and low-latency capabilities using Marvell’s Alaska PCIe Gen 6 retimer and TeraHop’s active optical cable, aimed at enhancing AI-driven data centers with scalable, high-performance connectivity.
The company’s consensus mark for fiscal 2026 earnings is pegged at $2.76 per share, which has decreased 1.8% over the past 30 days. MRVL has declined 8.5% in the trailing 12 months, in line with the returns of the SPDR S&P Semiconductor ETF.
Image: Bigstock
3 Semiconductor Stocks to Buy Amid Rising Data Center Demand
As the digital era continues to evolve, data centers stand at the heart of technological advancement, powering everything from cloud computing to artificial intelligence (AI).
In 2025, the growing demand for data centers will be fueled by advancements in AI, cloud computing and the need for more efficient infrastructure. This surge is driving key trends, such as hyperscale data centers, liquid cooling, edge computing, and a heightened focus on sustainability and energy efficiency.
Per the Fortune Business Insight report, the global data center market is projected to grow from USD 269.79 billion in 2025 to USD 584.86 billion by 2032, seeing a CAGR of 11.7%, reflecting the sector's robust growth, driven by increasing data storage and processing needs.
Semiconductor companies, including Credo Technology (CRDO - Free Report) , Broadcom (AVGO - Free Report) and Marvell Technology (MRVL - Free Report) , are likely to be among the key beneficiaries of this trend, as semiconductors are the foundational components of the hardware that powers data centers.
Data Center Demand to Aid Semiconductor Industry Prospects
The semiconductor industry is poised to benefit significantly from the increasing data center market in 2025, driven by the surge in AI and high-performance computing workloads leading to the rising demand for high-performance chips, particularly Graphics Processing Units (GPUs) and memory like High Bandwidth Memory (HBM).
As AI models grow more complex, the need for faster processing and efficient data storage has made GPUs and HBM crucial components. GPUs enable parallel processing for machine learning and deep learning tasks, while HBM provides the high-speed memory needed to handle massive datasets. This trend is expected to continue as AI applications become increasingly central to business and technological innovation.
Improvements in DRAM and NAND pricing will act as tailwinds for semiconductor stocks catering to the memory market.
The semiconductor industry is expected to continue its growth trajectory in 2025, driven by strong demand for AI and data center technologies, as well as increasing chip demand across various sectors. According to the Semiconductor Industry Association, global semiconductor sales reached $56.5 billion in January 2025, marking a 17.9% increase from $47.9 billion in January 2024. The global semiconductor market is projected to maintain its upward momentum, with sales anticipated to reach $697 billion in 2025.
Considering the immense growth prospects amid the rising data center demand, it is prudent for investors to look for fundamentally strong semiconductor stocks that are poised to benefit from this trend. Here, we are discussing three aforementioned stocks — CRDO, MRVL and AVGO — that look promising.
CRDO’s AEC Growth Drives Market Expansion in Data Centers
Credo Technology is gaining a strong market presence in both Ethernet and Active Electrical Cables (AECs) solutions specialized for data centers. AEC products experienced triple-digit sequential growth in the third quarter of fiscal 2025, driven by its increasing adoption in the data center market.
The demand for AECs grew as they proved to be more reliable than laser-based optical solutions, with ZeroFlap AECs offering more than 100 times better reliability than rack-to-rack solutions.
This made AECs an increasingly attractive option for data center applications, contributing to the new expansion of AEC usage and solidifying this Zacks Rank #1 (Strong Buy) company’s market position. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Credo Technology’s 2025 earnings is pegged at 63 cents per share, revised upward by 26% over the past 30 days. CRDO has skyrocketed 100.2% in the trailing 12 months compared with SPDR S&P Semiconductor ETF’s (XSD - Free Report) decline of 8.6%.
Credo Technology Group Holding Ltd. Price and Consensus
Credo Technology Group Holding Ltd. price-consensus-chart | Credo Technology Group Holding Ltd. Quote
Broadcom Boosts AI Data Centers With High-Speed Solutions
Broadcom is capitalizing on the growing investments in AI data centers, solidifying its role as a key player in the evolving data center market.
This Zacks Rank #2 (Buy) company recently launched the Sian3 and Sian2M high-speed networking chips for AI data centers, with Sian3 utilizing advanced 3-nanometer process technology for over 20% power reduction in optical modules. At the same time, Sian2M enhances power efficiency over multi-mode fiber to meet the growing demand for high-bandwidth connectivity in AI and ML clusters.
Broadcom’s recent introduction of PCIe Gen 6 technology, tested with Micron and Teledyne LeCroy, enhances AI data center performance with advanced telemetry and diagnostics through its Interoperability Development Platform.
The company’s consensus mark for 2025 earnings is pegged at $6.56 per share, which has increased 3.9% over the past 30 days. Broadcom has rallied 29.8% in the trailing 12 months and outperformed the SPDR S&P Semiconductor ETF.
Broadcom Inc. Price and Consensus
Broadcom Inc. price-consensus-chart | Broadcom Inc. Quote
Marvell Drives AI Data Centers With High-Speed Solutions
Marvell Technology is capitalizing on robust demand in the data center market, offering solutions like pulse amplitude modulation (PAM) chips, digital signal processors, silicon photonics and laser drivers that enhance data center communication.
The Zacks Rank #2 company’s networking solutions, like PAM products and ZR electro-optics, are gaining traction as data centers are becoming increasingly fundamental for AI due to the massive computing power, storage and networking capabilities required to train and deploy AI models efficiently. Its leadership in AI-driven data center infrastructure, custom silicon and high-speed networking has been noteworthy.
Further strengthening its innovation edge, Marvell Technology partnered with TeraHop to demonstrate the industry’s first end-to-end PCIe Gen 6 over optics at OFC 2025, showcasing PCIe’s extended reach and low-latency capabilities using Marvell’s Alaska PCIe Gen 6 retimer and TeraHop’s active optical cable, aimed at enhancing AI-driven data centers with scalable, high-performance connectivity.
The company’s consensus mark for fiscal 2026 earnings is pegged at $2.76 per share, which has decreased 1.8% over the past 30 days. MRVL has declined 8.5% in the trailing 12 months, in line with the returns of the SPDR S&P Semiconductor ETF.
Marvell Technology, Inc. Price and Consensus
Marvell Technology, Inc. price-consensus-chart | Marvell Technology, Inc. Quote