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AI Infrastructure Stocks: Billions of Reasons to Stay Bullish
Key Takeaways
Hundreds of billions are being poured out for AI-related infrastructure.
Spending is expected to remain robust as the buildout continues.
VRT and AVGO both reflect strong beneficiaries amid the spending frenzy.
The AI spending race shifted into a higher gear during this earnings season, with Microsoft, Amazon, Alphabet and Meta reporting roughly $170 billion in capital expenditures (CapEx).
Microsoft reported $41 billion of CapEx, Alphabet spent $44.9 billion and raised its full-year CapEx forecast, Meta deployed $31.1 billion while maintaining its outlook, and Amazon led the group with $54.2 billion in property and equipment purchases.
The spending is also showing returns, muting much of the previous skepticism we’ve all grown accustomed to in recent years. Microsoft is monetizing enterprise AI, Amazon and Alphabet are benefiting from accelerating cloud demand, and Meta’s AI-enhanced advertising business is helping fund its infrastructure buildout.
The spending surge creates a powerful demand tailwind across the AI infrastructure supply chain, with companies like Vertiv (VRT - Free Report) and Broadcom (AVGO - Free Report) reflecting major beneficiaries.
Vertiv Cools Data Centers
Vertiv’s Q2 revenue grew 24% to $3.3 billion in its latest period, with the demand picture leading it to also raise its full-year outlook. Its power management and high-density cooling systems benefit from the rising electricity and heat management requirements of AI data centers.
The stock sports a favorable Zacks Rank #2 (Buy) thanks to favorable EPS revisions stemming from the favorable environment. Revenue revisions have unsurprisingly followed a similar bullish path, with the $13.9 billion Zacks Consensus estimate for its current fiscal year rising 21% since last August and suggesting 36% YoY growth compared to FY25.
Image Source: Zacks Investment Research
Broadcom AI Semiconductor Revenue Surges
Broadcom’s Q2 revenue soared 48% to $22.2 billion, while AI semiconductor revenue surged an even more impressive 143% YoY to $10.8 billion on demand for custom accelerators and networking. Broadcom expects AI revenue to reach $16 billion next quarter, underscoring how strong its growth story will remain in the coming periods.
Sales estimates for Broadcom’s current and next fiscal years have been aggressively raised, with annual revenue expected to soar 66% in FY26 and 65% in FY27.
Image Source: Zacks Investment Research
Bottom Line
Investors have hundreds of billions of reasons why to remain bullish on the AI buildout, particularly for companies like Vertiv (VRT - Free Report) and Broadcom (AVGO - Free Report) , as companies continue to invest heavily in their AI futures.
View the Zacks #1 Rank List
Image: Bigstock
AI Infrastructure Stocks: Billions of Reasons to Stay Bullish
Key Takeaways
The AI spending race shifted into a higher gear during this earnings season, with Microsoft, Amazon, Alphabet and Meta reporting roughly $170 billion in capital expenditures (CapEx).
Microsoft reported $41 billion of CapEx, Alphabet spent $44.9 billion and raised its full-year CapEx forecast, Meta deployed $31.1 billion while maintaining its outlook, and Amazon led the group with $54.2 billion in property and equipment purchases.
The spending is also showing returns, muting much of the previous skepticism we’ve all grown accustomed to in recent years. Microsoft is monetizing enterprise AI, Amazon and Alphabet are benefiting from accelerating cloud demand, and Meta’s AI-enhanced advertising business is helping fund its infrastructure buildout.
The spending surge creates a powerful demand tailwind across the AI infrastructure supply chain, with companies like Vertiv (VRT - Free Report) and Broadcom (AVGO - Free Report) reflecting major beneficiaries.
Vertiv Cools Data Centers
Vertiv’s Q2 revenue grew 24% to $3.3 billion in its latest period, with the demand picture leading it to also raise its full-year outlook. Its power management and high-density cooling systems benefit from the rising electricity and heat management requirements of AI data centers.
The stock sports a favorable Zacks Rank #2 (Buy) thanks to favorable EPS revisions stemming from the favorable environment. Revenue revisions have unsurprisingly followed a similar bullish path, with the $13.9 billion Zacks Consensus estimate for its current fiscal year rising 21% since last August and suggesting 36% YoY growth compared to FY25.
Image Source: Zacks Investment Research
Broadcom AI Semiconductor Revenue Surges
Broadcom’s Q2 revenue soared 48% to $22.2 billion, while AI semiconductor revenue surged an even more impressive 143% YoY to $10.8 billion on demand for custom accelerators and networking. Broadcom expects AI revenue to reach $16 billion next quarter, underscoring how strong its growth story will remain in the coming periods.
Sales estimates for Broadcom’s current and next fiscal years have been aggressively raised, with annual revenue expected to soar 66% in FY26 and 65% in FY27.
Image Source: Zacks Investment Research
Bottom Line
Investors have hundreds of billions of reasons why to remain bullish on the AI buildout, particularly for companies like Vertiv (VRT - Free Report) and Broadcom (AVGO - Free Report) , as companies continue to invest heavily in their AI futures.