AI infrastructure stocks are the stocks of companies that provide the hardware, software, and physical systems needed to build, run, and scale artificial intelligence. Rather than creating AI applications (such as chatbots or image generators), these companies supply the underlying “picks and shovels” that make AI possible.
The AI infrastructure market continues to expand as technology companies invest billions of dollars in data centers, advanced chips, networking equipment, and power systems. Instead of focusing solely on AI software developers, many investors are looking at the companies building the foundation that makes artificial intelligence possible.
Types of AI infrastructure companies
Semiconductors: Design and manufacture AI chips and processors (e.g., NVIDIA, AMD, Broadcom).
Semiconductor equipment: Produce the machines used to manufacture advanced chips (e.g., ASML, Applied Materials).
Cloud computing: Operate data centers and provide AI computing services (e.g., Microsoft Azure, Amazon Web Services, Google Cloud).
Networking: Supply high-speed networking equipment that connects AI servers (e.g., Arista Networks, Cisco).
Power and cooling: Build electrical infrastructure and cooling systems for energy-intensive AI data centers (e.g., Vertiv, Eaton).
Memory and storage: Provide high-performance memory and storage required for AI workloads (e.g., Micron).
Why investors are interested
AI infrastructure companies may benefit as demand for AI computing grows because:
- AI models require enormous computing power.
- Companies are investing heavily in AI data centers.
- Underlying chips, networking, storage, and power infrastructure are all necessary for every AI application.
For this reason
Four Growing AI Infrastructure Stocks to Invest in for Long-Term Profits
One of the largest cycles of technology investment in decades is being driven by artificial intelligence (AI). Enterprises and cloud computing behemoths alike are making significant investments in cutting-edge infrastructure to develop, implement, and expand AI applications. great-performance CPUs, memory, storage, and enterprise servers are in great demand due to this spending boom, which presents substantial opportunities for businesses who supply these vital technologies.
The continued expansion in AI infrastructure will continue to benefit companies that support it, such as Micron Technology, Inc. MU, Hewlett Packard Enterprise Company (HPE), SanDisk Corporation (SNDK), and NVIDIA Corporation (NVDA).
All four are trading below the projected 12-month price-to-earnings (P/E) multiple of 22.92 for the Zacks Computer and Technology sector, providing investors with an alluring combination of growth and fair pricing despite their remarkable growth prospects and solid earnings momentum.
A Common Theme
This article seems to have a recurring theme. Before this selloff started, we reduced our stake in each of the aforementioned AI-infrastructure stocks. This website has documentation for each of the sales.
The fact that we locked in gains early makes it simpler to take the next necessary step, which is to drastically cut our holdings in any remaining AI infrastructure-related stocks.
Completely Gone
Corning is no longer with us. A stock that quickly drops from its all-time high to below its 200-day moving average cannot be held. It’s time to close the remaining portion of our position after we were lucky to close one-third of it close to its highs.
Micron has vanished. As shown here, our cost basis for this stock was $127.
CHalved, Again
As previously mentioned, we cut our Nvidia and AMD holdings in half at the end of last year. We are now cutting them in half once more. The size of our Nvidia and AMD positions has decreased by 25%. Additionally, we are cutting our stake in Broadcom in half (AVGO).
We’re cutting or shutting all names that have exposure to AI infrastructure in addition to the stocks mentioned above. It’s time to leave this area, which has been quite kind to us.
Bottom Line
I concluded my November 26 piece by saying, “It’s not a question of believing in a stock, it’s a question of believing what I see on a chart.”
I should drastically cut back on my exposure to stocks in the AI infrastructure industry based on what I’m now seeing on my charts.
