After a dismal first quarter of 2008, data center stocks roared back to huge gains in the second quarter, with 9 out of 12 publicly held companies scoring double-digit gains. All but one data center specialist beat the Dow, which declined 7.44 percent in the second quarter, while the S&P 500 fell 3.3 percent and the NASDAQ managed a 0.6 percent gain.
The surge marked a solid recovery from the first quarter, when all 13 stocks we track lost ground (one company, Bladelogic, has since been acquired). Shares of data center companies were beaten up early in the year by concerns that the credit crunch and losses in the financial sector would lower demand for data center services.
In recent months it has become clear that data center demand is holding steady, prompting the largest players in the field - including Equinix (EQIX) Digital Realty (DLR), Terremark (TMRK) and Switch and Data (SDXC) to raise their revenue guidance for Wall Street.
The biggest gainer in the second quarter was NaviSite (NAVI), which gained 71.9 percent. Like many stocks in the sector, it was bouncing back from the first quarter , when it was the sector's worst performer with a 56 percent decline.
Rackable (RACK) has benefitted from growing interest in servers for high-density cloud computing and data center containers, two of the specialized markets targeted by the company. Rackable appears positioned for its ICE Cube container to compete for business from Microsoft and others, and has just announced a new line of Extreme Efficiency [XE] servers. That helped Rackable shares improve by 47 percentont he quarter.