Buy 3 AI Infrastructure Stocks Backed by Past Month's Solid Momentum

The artificial intelligence (AI) infrastructure space recently gathered steam, with the DeepSeek-related fears turning out to be overblown. Moreover, chances of a trade deal between the United States and its major trading partners, the Fed’s indication of two rate cuts of 25 basis points each this year and the evaporation of recession worries in the U.S. economy have boosted market participants confidence.

At this stage, we have narrowed our search to three AI infrastructure stocks that have that have surged in the past month with more than 10% returns. Each of these stocks currently sports a Zacks Rank #1 (Strong Buy), indicating solid upside momentum in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.

These stocks are: Credo Technology Group Holding Ltd. CRDO, Jabil Inc. JBL and Lumentum Holdings Inc. LITE.

AI Frenzy Flourishing

The AI space remains rock solid supported by an extremely bullish demand scenario. Four of the “magnificent 7” stocks have decided to invest a massive $325 billion in 2025 as capital expenditure for AI-infrastructure development. This marks a significant 46% year-over-year increase in capital spending on the AI ecosystem. 

This huge spending on AI infrastructure will dramatically change the world over the next five years in fields such as hyperscale automation, robotics, healthcare, energy, materials, financials and cybersecurity. Research firm Oppenheimer estimated that the total addressable global sovereign AI market could be a massive $1.5 trillion.

The chart below shows the price performance of our five picks in the past month.

Credo Technology Group Holding Ltd.

Credo Technology 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 main business is its Active Electrical Cables (AEC) product line. AEC is gaining traction owing to its increasing adoption in the data center market. The demand for AECs is increasing as ZeroFlap AECs offer more than 100 times improved reliability than laser-based optical solutions. 

This made AECs an increasingly attractive option for data center applications. With the demonstration of PCIe Gen6 AECs and increasing hyperscaler interest, this product line is expected to remain a growth engine.

Strength in the optical business, particularly Optical Digital Signal Processors (DSPs), is another key catalyst. CRDO expects an expansion of customer diversity across lane rates, port speeds and applications to accelerate revenue growth going forward. 

CRDO announced that it achieved a key 800-gig transceiver DSP design win and unveiled ultra-low-power 100 gig-per-lane optical DSPs built on 5-nanometer technology. CRDO expects its 3-nanometer 200 gig-per-lane optical DSP to boost the industry’s transition to 200-gig lane speeds. 

Supplementing these businesses is CRDO’s PCIe retimers and Ethernet retimers business. This particular product line continues to witness customer interest, especially for scale-out networks in AI servers. CRDO highlighted that the retimer business delivered “robust” performance driven by 50 gig and 100 gig per lane Ethernet solutions.

This growing demand underscores the increasing importance of high-performance solutions in the rapidly expanding AI server market. Shift to 100 gig per lane solutions and higher demand for system-level expertise and software capabilities for dealing with AI-optimized architectures bode well for CRDO’s retimer business.

Credo Technology has an expected revenue and earnings growth rate of 85.8% and more than 100%, respectively, for the current year (ending April 2026). The Zacks Consensus Estimate for current-year earnings has improved 37% in the last 60 days.

Jabil Inc. 

Jabil has been benefiting immensely from healthy momentum in capital equipment, AI-powered data center infrastructure, cloud, and digital commerce business verticals. Its focus on end-market and product diversification is a key catalyst. Jabil’s target that “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable. 

JBL’s high free cash flow indicates efficient financial management practices, optimum utilization of assets, and improved operational efficiency. Massive application of generative AI is set to drastically increase the efficiency of JBL’s automated optical inspection machines for the automation industry. A large-scale portfolio of business sectors offers JBL a high degree of resiliency during times of macroeconomic and geopolitical disruption.

Jabil has an expected revenue and earnings growth rate of 5.6% and 17.8%, respectively, for next year (ending August 2026). The Zacks Consensus Estimate for next-year earnings has improved 8.4% over the last 30 days.

Lumentum Holdings Inc.

Lumentum Holdings 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 artificial intelligence, cloud computing, 5G connectivity, and beyond.

LITE’s industrial lasers are used in precision manufacturing, such as cutting semiconductors and solar cells. LITE also develops 3D sensing laser diodes for applications like facial recognition in smartphones and autonomous vehicle sensors.

Shares of Lumentum have gathered momentum in the past three months boosted by growing AI demand. LITE is developing and providing photonic solutions for AI applications, particularly for data centers. LITE’s major AI-enabled offerings are high-speed transceivers, optical circuit switches, and lasers that enable faster, more efficient, and scalable AI infrastructure. 

Moreover, LITE has a strong collaboration with NVIDIA Corp. NVDA in developing NVDA’s silicon photonics ecosystem, especially for deploying the latter’s Spectrum-X Photonics networking switches.

Lumentum Holdings has an expected revenue and earnings growth rate of 32,8% and more than 100%, respectively, for the current year (ending June 2026). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last seven days.

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This article originally published on Zacks Investment Research (zacks.com).

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