3 Semiconductor Stocks to Buy Amid Rising Data Center Demand

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Nilanshi Mukherjee

Fri, Mar 28, 2025, 6:44 AM 5 min read

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, Broadcom AVGO and Marvell Technology MRVL, 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.