These dividend stocks could catch a tailwind from data center pushback

These dividend stocks could catch a tailwind from data center pushback. The backlash against artificial intelligence data centers could prove a tailwind for real estate investment trusts in the sector.

What happened

Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuIn this articleAMZNAAPLORCLDLREQIXIRMFollow your favorite stocksCREATE FREE ACCOUNTInside one of Equinix's internal operations at Equinix Data Center in Ashburn, Virginia, on May 9, 2024. There are three data center stocks in the FTSE Nareit Equity REITs Index: Digital Realty Trust, Equinix and Iron Mountain. Tailwind for REITsThe data center resistance could act as a tailwind for REITS, although the story is nuanced, said Wells Fargo Investment Institute analyst Amanda Martinez. In this articleQCOMAMZNFollow your favorite stocksCREATE FREE ACCOUNTwatch nowVIDEO4:0804:08Qualcomm to build chips for AmazonSquawk on the StreetQualcomm shares rose 3% on Tuesday after the company announced a data center infrastructure partnership with Amazon Web Services, a major win as the chipmaker tries to take on Nvidia in the artificial intelligence market.

Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuIn this articleVRTFollow your favorite stocksCREATE FREE ACCOUNTwatch nowVIDEO3:4003:40Data centers are driving demand for this company's power products. Be sure to catch WIRED’s first livestream on data centers this Thursday, September 10, featuring Molly, senior politics correspondent Hugo Lowell, and senior business writer Max Zeff! Protests have sprung up nationally as hyperscalers look to build data centers to train and run their AI models.

The wider picture

Not only do the data centers take up large amounts of land, they consume enormous amounts of electricity and water and are noisy. There are already more than 4,700 data centers across the country — a number expected to grow exponentially. PwC projects that annual data center spending will rise to $1. Using REITs to play AI While the hyperscalers are getting all the attention, another way to play the AI data center race is through real estate investment trusts.

"Amid political and community push-back, while new projects could see delay, it could be a positive for existing projects/DC [data center] REITs which have pricing power driven by continuously expanding compute demand," Mizuho analyst Vikram Malhotra said in a Sept. The public REITs own about 275 data centers in the United States — less than 10% of the owner/operated and leased data centers in the country, the group said. Data center REITsTicker Company Div yield YTD performance DLRDigital Realty Trust2.

"Alex Pettee, president and director of research and ETFs at Hoya Capital Real Estate, is also bullish on supply and demand for data center REITs.

What has been reported

"But zoom out, and if zoning gets tougher, power gets harder to secure, and communities don't want new facilities, the data centers that are already there become more valuable. The chipmaker is trying to move into the data center business, where Nvidia has been the dominant player in the AI boom. But the company made a big splash in June, when it revealed a central processing unit for data centers called Dragonfly C1000, and said that Meta would use it when it starts production in 2028.

Qualcomm said at the time that it's targeting $15 billion in data center sales in fiscal 2029, and pointed to a road map for going after the market with several different products, including an AI chip and a product that will tie multiple chips together. Intel and Advanced Micro Devices are both seeing surging demand for their data center CPUs, and Nvidia in March offered new details about its agentic-optimized CPUs. WATCH: Qualcomm partners with AWSwatch nowVIDEO1:5801:58Qualcomm partners with Amazon to build next-gen AI data center infrastructureSquawk on the StreetChoose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

Vertiv, headquartered in Westerville, Ohio, is an electrical power equipment manufacturer, and many of the DC power systems, heat rejection and data center cooling solutions and other equipment it makes are critical in data centers. S. immigration enforcement, and also the growing number of major projects being planned, specifically data centers.

What happens next

Where a large data center campus once needed something like 750 workers at its peak, the biggest projects now require far more. Kelly, the global staffing company, has said that 90% of data center operators now name staffing shortages as a critical constraint on their ability to build or expand. From now until the midterms, senior writer Molly Taft will be sharing their thoughts every Sunday on this political season’s hottest issue: data centers. It’s been a rough summer for data center boosters.

Polling is getting even more dismal—as many as 75 percent of Americans now say they would oppose a data center being built in their area, up from 42 percent last year. But while some Republicans are turning tail on the issue even in the face of President Donald Trump’s vigorous support for data center construction, others are joining prominent tech leaders in doubling down on an old narrative: That China is responsible for all this malaise.

In late August, X announced that it had identified 200 accounts linked to China that were helping to spread anti-data center talking points on the platform, causing a flurry of alarmist headlines and tweets. (“China is secretly fueling America's data center rage,” Axios trumpeted in an article on X’s report, which data center-friendly politicians and right-wing figures amplified using X itself. ) Even the president joined in: “China could not be happier with this anti Data Center movement,” he wrote in a Truth Social post defending data centers (“let Data Reign! ”) made just a few days after the X report.

The report has been compiled by The Daily Waves using information reported across cnbc.com, techcrunch.com. Details are presented according to the information available at the time of publication and may change as authorities, organisers or other relevant parties provide updates.