Betting on the Backbone: 3 AI Infrastructure Stocks

Many investors vividly remember the dot-com bubble of the late 1990s. During that era, speculative websites with no revenue collapsed, wiping out billions in market value. However, the companies that built the physical infrastructure of the internet, like fiber optic cables, servers, and routers, did not disappear. Instead, they became the permanent foundation for the modern digital economy. Today, the artificial intelligence (AI) revolution is approaching a similar turning point.

AI valuations are soaring, but they depend on scarce and accelerating physical resources. Unlike the 1990s, when companies built too much fiber optic capacity (creating a glut), the AI era faces a critical shortage of physical inputs. We have plenty of code, but we lack sufficient reliable electricity to power the data centers and the necessary rare earth minerals to build the advanced hardware.

This structural shortage creates a physical floor for investors. While software stocks may face volatility, the infrastructure required to power them represents a tangible asset play. Three companies are positioned to capitalize on this power and dust trade, serving as a hedge against tech sector volatility.

The New Bandwidth Is Baseload Power

Just as the early internet required massive bandwidth to function, AI data centers require an enormous amount of electricity. These facilities run 24/7, creating a demand for baseload power that intermittent renewable sources, like wind and solar, cannot provide on their own. This reality has moved advanced nuclear energy from a niche science project to a utility-grade necessity.

NuScale Power Corporation (NYSE: SMR) is currently the regulatory leader in this space. It holds the first and only Small Modular Reactor (SMR) design certified by the U.S. Nuclear Regulatory Commission (NRC).

This regulatory moat recently translated into massive commercial validation.

In September 2025, NuScale’s partner signed a landmark agreement with the Tennessee Valley Authority (TVA) to deploy up to 6 gigawatts (GW) of SMR capacity.

Despite this progress, NuScale’s stock price has pulled back to around $19.85 following a $750 million at-the-market equity offering in November. While dilutive, the move bolstered the company’s financials:

• Cash Position: NuScale now holds approximately $753 million in cash and investments with zero debt.
• Revenue Growth: In the Q3 2025 earnings report, revenue jumped to $8.24 million, up over 1,600% year-over-year (YOY), driven by engineering fees.
• Contextualizing the Loss: While the company reported a large net loss of $532.6 million, the vast majority of that ($495 million) was a one-time, non-cash expense related to the ENTRA1 partnership—not cash burned from operations.

Furthermore, NuScale’s selection for the U.S. Army’s Janus Program signals that its technology is relevant to national defense, providing government backing that purely commercial tech stocks lack. Additionally, a new agreement with major shareholder Fluor Corporation (NYSE: FLR) to monetize its stake in an orderly fashion through 2026 removes an overhang of selling pressure that had previously worried investors.

The Hardware of 2026 Is Rare Earths

In the 1990s, the Internet relied on physical switches and routers. Today, the physical side of AI (robotics, drones, and advanced data center cooling systems) depends on high-performance permanent magnets. These magnets must be mined and refined from rare-earth elements.

MP Materials Corp. (NYSE: MP) is the Western Hemisphere’s dominant producer of these critical materials.

On Nov. 24, 2025, analysts at BMO Capital Markets upgraded the stock to Outperform with a $75 price target, citing the long-term value of a non-Chinese supply chain.

MP Materials has successfully pivoted its business model. In the third quarter of 2025, the company intentionally stopped selling raw concentrate to China to comply with U.S. defense contracts. While this caused total revenue to dip 15%, it was offset by a surge in higher-value revenue streams:

• Production Records: The company produced a record 721 metric tons of Neodymium-Praseodymium (NdPr) oxide, a 51% increase YOY.
• New Revenue: The company generated $21.9 million from its new Magnetics segment, proving its vertical integration strategy is working.
• Fortress Balance Sheet: MP Materials holds nearly $1.94 billion in liquidity, giving it the runway to expand while competitors struggle.

Most importantly, MP Materials enjoys a unique safety net. In October 2025, the Department of War activated a Price Protection Agreement (PPA) with the company. This establishes a price floor of $110 per kilogram for NdPr and effectively insures the company’s revenue against market downturns, a luxury that standard tech stocks do not possess.

The Vertical Challenger: USA Rare Earth

While MP Materials is the established leader, the market is actively seeking a fully integrated mine-to-magnet alternative—and USA Rare Earth Inc. (NASDAQ: USAR) is positioning itself to fill this gap.

The company recently achieved a major milestone in its vertical integration strategy by closing the acquisition of Less Common Metals on Nov. 20, 2025.

This acquisition gives the company immediate metal-making capabilities, effectively closing the operational loop between its Round Top mine in Texas and its magnet manufacturing plant in Oklahoma, which is on track for commissioning in the first quarter of 2026.

USA Rare Earth’s stock price has faced significant pressure, dropping 48% over the last 30 days.

However, investors need to understand that this decline appears to be a technical dislocation rather than a business failure. On Oct. 30, the company issued a notice to redeem all outstanding warrants with a deadline of Dec. 1, 2025. This notice forces warrant holders to either exercise their right to buy stock (bringing more cash to the company) or sell the warrants. Such an order often creates temporary, heavy selling pressure.

After the Dec. 1 deadline, the artificial selling pressure is expected to alleviate. Fundamentally, the company is in a strong position, having recently received a $125 million equity investment and raised an additional $163 million from warrant exercises.

With over $400 million in cash and tangible progress toward production, the current share price may represent a discount.

Buying the Foundation, Not the Facade

The AI Bubble fears dominating headlines are primarily focused on valuation, not usage. Even if stock prices for software companies decline, the physical consumption of energy and materials required to run AI models is on a non-negotiable upward trajectory. Data centers cannot operate without power, and robots cannot move without magnets.

NuScale Power, MP Materials, and USA Rare Earth represent unavoidable toll booths on the road to an AI economy. Whether through the atoms of nuclear fuel or the magnetic pull of rare earth minerals, these companies provide the essential inputs for the next decade of growth.

They combine the upside potential of the AI sector with the tangible asset protection of critical infrastructure and explicit government support. In a market shaken by questions about the durability of digital hype, the safest place may be the foundation.

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