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Big Techs Assure Lasting AI Frenzy - Which Stocks Will Gain?
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Key Takeaways
Meta, Alphabet, Microsoft and Amazon raise AI capex to $725B by 2026 amid rising infra costs.
NVIDIA benefits from Blackwell GPUs and plans Vera Rubin superchip shipments starting 2026.
Micron and Western Digital gain from surging AI-driven memory and high-capacity storage demand.
After the closing bell on April 29, four artificial intelligence (AI) hyperscalers reported earnings results. Together these four AI giants — Meta Platforms Inc. (META), Alphabet Inc. (GOOGL), Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) — raised their AI capital expenditure budget to $725 billion in 2026 from $670 billion estimated earlier.
The major reason for the recent hike is due to expectations of higher AI infrastructure component prices and incremental costs for expanding data center capacity in the near future. Research firm McKinsey & Co. has estimated that global AI-powered data center infrastructure capex will reach around $7 trillion by 2030.
This enormous growth of AI-powered data centers resulted in a crunch of both high-performance and low-powered chips as well as other memory components. Below we will discuss a few major AI infrastructure companies that are going to benefit from this massive capex of hyperscalers.
AI Semiconductor Behemoths
NVIDIA Corp. (NVDA - Free Report) — the undisputed global leader of generative AI-powered graphical processing units (GPUs) — has been benefiting from higher shipments of the Blackwell GPU computing platforms.
In January, NVDA unveiled its new AI superchip — Vera Rubin — during the annual CES technology conference in Las Vegas. This innovative rack-scale system will deliver 10 times more performance per watt than its predecessor, Grace Blackwell.
NVIDIA will start the shipment of Vera Rubin in the second half of 2026. It has decided to announce its roadmap for Rubin Ultra, likely to be introduced in late 2027, and Feynman AI chips to be launched in 2028. NVDA currently carries a Zacks Rank #2 (Buy).
Broadcom Inc. (AVGO - Free Report) is experiencing strong momentum fueled by growth in AI semiconductors and continued success with its VMware integration. Strong demand for its networking products and custom AI accelerators (XPUs) has been noteworthy.
While the latest expansion of deals with Google and Anthropic has given AVGO a lift, the company is thriving primarily due to its AI semiconductor solutions, including custom AI accelerators and AI networking. AVGO’s AI segment benefits from custom accelerators and advanced networking technology that support large-scale AI deployments with improved performance and efficiency. AVGO currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Credo Technology Group Holding Ltd. (CRDO) is a provider of high-performance serial connectivity solutions for the hyperscale datacenter, 5G carrier, enterprise networking, artificial intelligence and high-performance computing markets.
CRDO’s Active Electrical Cables (“AEC”) business sits at the core of its growth narrative, playing an increasingly critical role in AI-driven networking deployments. CRDO’s hyperscaler traction sits at the center of its AEC strength. Beyond traditional hyperscalers, Credo is also seeing increasing demand from Neocloud providers. CRDO currently sports a Zacks Rank #1.
The chart below shows the price performance of three above-mentioned stocks year to date.
Image Source: Zacks Investment Research
AI-Driven Memory and Storage Giants
Micron Technology Inc. (MU - Free Report) is benefiting from the rapidly expanding AI-driven memory and storage markets. MU has become a leader in the AI infrastructure boom due to strong demand for its high-bandwidth memory (HBM) solutions. Record sales in the data center end market and accelerating HBM adoption have been driving MU’s Dynamic Access Random Memory (DRAM) revenues higher.
The growing adoption of AI servers is reshaping the DRAM market as these systems require significantly more memory than traditional servers. This is boosting demand for both high-capacity DIMMs (Dual In-line Memory Module) and low-power server DRAM. MU currently sports a Zacks Rank #1.
Western Digital Corp. (WDC - Free Report) has been witnessing strong execution amid intensified cloud and AI demand. WDC saw strong data center demand and increased adoption of high-capacity hard disk drives (HDDs). This reflects its ability to scale reliable, high-capacity storage solutions to meet the needs of the AI-driven data economy.
As AI and cloud adoption accelerate, demand for higher-density storage continues to rise. WDC is meeting this demand through close collaboration with hyperscalers, delivering reliable, high-capacity drives at scale with strong performance and total cost of ownership. WDC currently carries a Zacks Rank #3 (Hold).
Seagate Technology Holdings plc (STX) has been witnessing strong execution amid intensified cloud and AI demand. STX’s high-capacity nearline production is largely booked through 2026, with long-term contracts providing strong demand visibility through 2027. Advancing aerial density remains a major strength for STX and a key driver of progress across the entire hard drive industry.
STX’s aerial density roadmap ensures a lasting total cost of ownership (TCO) advantage for hard drives over alternative technologies. Customers recognize the value of higher-capacity HAMR drives as the most efficient solution to meet growing AI-driven data storage demands. STX currently carries a Zacks Rank #3.
The chart below shows the price performance of three above-mentioned stocks year to date.
Image Source: Zacks Investment Research
Data Center Infra Provider Bigwigs
Vertiv Holdings Co. (VRT - Free Report) benefits from an extensive product portfolio, which spans thermal systems, liquid cooling, UPS, switchgear, busbar, and modular solutions. VRT also benefited from the accelerating digital transformation driven by AI and data center demand.
Vertiv’s partnership with NVIDIA is a key catalyst. VRT co-develops an 800-volt DC power architecture with NVDA, timed to align with the 2027 rollout of NVIDIA's Rubin Ultra platforms. This keeps VRT one GPU generation ahead of evolving silicon architectures, ensuring that its infrastructure solutions remain relevant as rack power requirements scale toward and beyond the megawatt threshold. VRT currently sports a Zacks Rank #1.
Comfort Systems USA Inc. (FIX) operates primarily in the commercial and industrial heating, ventilation and air conditioning (“HVAC”) markets. The data center boom, driven by AI, cloud computing, and high-performance computing, is fueling demand for specialized HVAC solutions from FIX.
Cooling systems for these facilities should deliver precise and reliable performance, prompting investments in advanced technologies such as liquid cooling and modular units. This segment is becoming a significant growth driver for FIX, offering high-margin opportunities and attracting M&A activity. FIX currently sports a Zacks Rank #1.
Lumentum Holdings Inc. (LITE) designs and manufactures optical and photonic technologies for high-speed telecommunications, data centers, and advanced manufacturing. LITE provides components, such as transceivers and lasers for fiber-optic networks, supporting the rapid growth of AI, cloud computing, 5G connectivity, and beyond.
LITE’s technology leadership in high-speed optical components has positioned it as an essential supplier to hyperscale customers deploying next-generation network architectures. Moreover, LITE has a strong collaboration with NVIDIA for developing NVDA’s silicon photonics ecosystem, especially for deploying the latter’s Spectrum-X Photonics networking switches. LITE currently carries a Zacks Rank #3.
The chart below shows the price performance of three above-mentioned stocks year to date.
Image Source: Zacks Investment Research
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Big Techs Assure Lasting AI Frenzy - Which Stocks Will Gain?
Key Takeaways
After the closing bell on April 29, four artificial intelligence (AI) hyperscalers reported earnings results. Together these four AI giants — Meta Platforms Inc. (META), Alphabet Inc. (GOOGL), Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) — raised their AI capital expenditure budget to $725 billion in 2026 from $670 billion estimated earlier.
The major reason for the recent hike is due to expectations of higher AI infrastructure component prices and incremental costs for expanding data center capacity in the near future. Research firm McKinsey & Co. has estimated that global AI-powered data center infrastructure capex will reach around $7 trillion by 2030.
This enormous growth of AI-powered data centers resulted in a crunch of both high-performance and low-powered chips as well as other memory components. Below we will discuss a few major AI infrastructure companies that are going to benefit from this massive capex of hyperscalers.
AI Semiconductor Behemoths
NVIDIA Corp. (NVDA - Free Report) — the undisputed global leader of generative AI-powered graphical processing units (GPUs) — has been benefiting from higher shipments of the Blackwell GPU computing platforms.
In January, NVDA unveiled its new AI superchip — Vera Rubin — during the annual CES technology conference in Las Vegas. This innovative rack-scale system will deliver 10 times more performance per watt than its predecessor, Grace Blackwell.
NVIDIA will start the shipment of Vera Rubin in the second half of 2026. It has decided to announce its roadmap for Rubin Ultra, likely to be introduced in late 2027, and Feynman AI chips to be launched in 2028. NVDA currently carries a Zacks Rank #2 (Buy).
Broadcom Inc. (AVGO - Free Report) is experiencing strong momentum fueled by growth in AI semiconductors and continued success with its VMware integration. Strong demand for its networking products and custom AI accelerators (XPUs) has been noteworthy.
While the latest expansion of deals with Google and Anthropic has given AVGO a lift, the company is thriving primarily due to its AI semiconductor solutions, including custom AI accelerators and AI networking. AVGO’s AI segment benefits from custom accelerators and advanced networking technology that support large-scale AI deployments with improved performance and efficiency. AVGO currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Credo Technology Group Holding Ltd. (CRDO) is a provider of high-performance serial connectivity solutions for the hyperscale datacenter, 5G carrier, enterprise networking, artificial intelligence and high-performance computing markets.
CRDO’s Active Electrical Cables (“AEC”) business sits at the core of its growth narrative, playing an increasingly critical role in AI-driven networking deployments. CRDO’s hyperscaler traction sits at the center of its AEC strength. Beyond traditional hyperscalers, Credo is also seeing increasing demand from Neocloud providers. CRDO currently sports a Zacks Rank #1.
The chart below shows the price performance of three above-mentioned stocks year to date.
Image Source: Zacks Investment Research
AI-Driven Memory and Storage Giants
Micron Technology Inc. (MU - Free Report) is benefiting from the rapidly expanding AI-driven memory and storage markets. MU has become a leader in the AI infrastructure boom due to strong demand for its high-bandwidth memory (HBM) solutions. Record sales in the data center end market and accelerating HBM adoption have been driving MU’s Dynamic Access Random Memory (DRAM) revenues higher.
The growing adoption of AI servers is reshaping the DRAM market as these systems require significantly more memory than traditional servers. This is boosting demand for both high-capacity DIMMs (Dual In-line Memory Module) and low-power server DRAM. MU currently sports a Zacks Rank #1.
Western Digital Corp. (WDC - Free Report) has been witnessing strong execution amid intensified cloud and AI demand. WDC saw strong data center demand and increased adoption of high-capacity hard disk drives (HDDs). This reflects its ability to scale reliable, high-capacity storage solutions to meet the needs of the AI-driven data economy.
As AI and cloud adoption accelerate, demand for higher-density storage continues to rise. WDC is meeting this demand through close collaboration with hyperscalers, delivering reliable, high-capacity drives at scale with strong performance and total cost of ownership. WDC currently carries a Zacks Rank #3 (Hold).
Seagate Technology Holdings plc (STX) has been witnessing strong execution amid intensified cloud and AI demand. STX’s high-capacity nearline production is largely booked through 2026, with long-term contracts providing strong demand visibility through 2027. Advancing aerial density remains a major strength for STX and a key driver of progress across the entire hard drive industry.
STX’s aerial density roadmap ensures a lasting total cost of ownership (TCO) advantage for hard drives over alternative technologies. Customers recognize the value of higher-capacity HAMR drives as the most efficient solution to meet growing AI-driven data storage demands. STX currently carries a Zacks Rank #3.
The chart below shows the price performance of three above-mentioned stocks year to date.
Image Source: Zacks Investment Research
Data Center Infra Provider Bigwigs
Vertiv Holdings Co. (VRT - Free Report) benefits from an extensive product portfolio, which spans thermal systems, liquid cooling, UPS, switchgear, busbar, and modular solutions. VRT also benefited from the accelerating digital transformation driven by AI and data center demand.
Vertiv’s partnership with NVIDIA is a key catalyst. VRT co-develops an 800-volt DC power architecture with NVDA, timed to align with the 2027 rollout of NVIDIA's Rubin Ultra platforms. This keeps VRT one GPU generation ahead of evolving silicon architectures, ensuring that its infrastructure solutions remain relevant as rack power requirements scale toward and beyond the megawatt threshold. VRT currently sports a Zacks Rank #1.
Comfort Systems USA Inc. (FIX) operates primarily in the commercial and industrial heating, ventilation and air conditioning (“HVAC”) markets. The data center boom, driven by AI, cloud computing, and high-performance computing, is fueling demand for specialized HVAC solutions from FIX.
Cooling systems for these facilities should deliver precise and reliable performance, prompting investments in advanced technologies such as liquid cooling and modular units. This segment is becoming a significant growth driver for FIX, offering high-margin opportunities and attracting M&A activity. FIX currently sports a Zacks Rank #1.
Lumentum Holdings Inc. (LITE) designs and manufactures optical and photonic technologies for high-speed telecommunications, data centers, and advanced manufacturing. LITE provides components, such as transceivers and lasers for fiber-optic networks, supporting the rapid growth of AI, cloud computing, 5G connectivity, and beyond.
LITE’s technology leadership in high-speed optical components has positioned it as an essential supplier to hyperscale customers deploying next-generation network architectures. Moreover, LITE has a strong collaboration with NVIDIA for developing NVDA’s silicon photonics ecosystem, especially for deploying the latter’s Spectrum-X Photonics networking switches. LITE currently carries a Zacks Rank #3.
The chart below shows the price performance of three above-mentioned stocks year to date.
Image Source: Zacks Investment Research