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Citi Boosts Data Center Forecast on AI Demand, Names Top Stock Picks
Citi has raised its global data center growth forecast, citing accelerating investment in artificial intelligence and high-performance computing. The bank now projects a 25% compound annual growth rate (CAGR) for data center IT load through 2031 and has identified a list of companies across multiple sectors expected to benefit from the trend.
AI Boom Fuels Upgraded Forecast
In a new research note, Citi analysts updated their Global Data Center Industry model, forecasting that global IT load will expand from 121 gigawatts in 2026 to 370 gigawatts by 2031. The bank's growth outlook assumes the annual absorption of IT load will accelerate from 35 gigawatts in 2026 to 60 gigawatts in 2031.
The revision was attributed to several factors, including strong demand for AI token consumption, faster semiconductor sales, and the inclusion of China, which was previously excluded from its models. Citi also highlighted expanding demand for "agentic AI workloads" and broader enterprise adoption as key drivers.
Supply Constraints and Market Dynamics
Despite the strong demand, Citi noted that the market faces short-term supply constraints. These are primarily due to limited energy availability in key markets and regulatory actions, such as temporary pauses on data center development approvals in Texas and New York.
AdAccording to the bank, these constraints are making projects that have already been approved with allocated energy more valuable. This dynamic is also pushing hyperscalers and AI developers to pre-lease capacity well into the 2028-2030 timeframe to secure resources ahead of anticipated demand.
Citi's Top Picks Across Sectors
Based on its bullish multi-year outlook, Citi named several companies it favors to capitalize on the data center expansion. The bank's recommendations span the entire AI value chain, from infrastructure to software.
- Data Centers: Equinix (EQIX), Digital Realty Trust (DLR), and TeraWulf (WULF).
- U.S. Utilities: NextEra Energy (NEE) and FirstEnergy (FE).
- Semiconductors: AMD and Celestica (CLS).
- Internet: Amazon (AMZN), Alphabet (GOOGL), and Meta (META).
- Software: Microsoft (MSFT), Oracle (ORCL), and neocloud providers.
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