AI Infrastructure Stocks: Billions of Reasons to Stay Bullish

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 and Broadcom AVGO 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.

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.

Bottom Line

Investors have hundreds of billions of reasons why to remain bullish on the AI buildout, particularly for companies like Vertiv VRT and Broadcom AVGO, as companies continue to invest heavily in their AI futures.

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

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