Data Center Spending Will Surge to $1.4 Trillion in 2027. Here’s 1 Stock to Buy With $500 to Capitalize on This Massive Opportunity

By 2027, spending on data center systems is projected to surge by 55%, reaching nearly $1.4 trillion. This growth is fueled by hyperscalers and AI companies expanding their data center infrastructure to accommodate artificial intelligence workloads. As a result, the semiconductor industry is expected to experience significant growth, as chips make up 95% of an AI data center server rack's value.

Applied Materials (AMAT), a leading manufacturer and seller of semiconductor manufacturing equipment, has capitalized on the healthy demand for chips this year. The company reported a 25% year-over-year revenue increase to $9.12 billion in its fiscal 2026 third-quarter results, with non-GAAP earnings per share jumping 41% to a record $3.50.

Looking ahead, Applied Materials anticipates its semiconductor revenue could grow from $1 trillion in 2025 to a range of $1.7 trillion to $3.2 trillion by 2030, driving demand for wafer and fabrication equipment (WFE) sales. The company's services segment is expected to generate over $12 billion in revenue by 2030, up from $6.4 billion in fiscal 2025.

With an attractive valuation at around $400 per share, trading at just 23 times forward earnings, and analysts projecting a nearly doubled EPS within two years, Applied Materials could potentially reach a premium valuation of $710 per share within two years.