Ballooning capital expenditures on AI data centers will benefit the entire tech stack of computer gear makers, analysts say. The trend is positive for AI stocks providing the picks and shovels for the modern-day gold rush.
BNP Paribas analyst Karl Ackerman said the increased spending revealed Wednesday by tech giants Alphabet (GOOGL), Meta Platforms (META) and Microsoft (MSFT) has positive implications for more than just AI chipmakers AMD (AMD) and Nvidia (NVDA).
“We expect the unprecedented capex investment should benefit the entire data center supply chain,” Ackerman said in a client note Thursday.
Ackerman named as AI beneficiaries Arista Networks (ANET), Broadcom (AVGO), Celestica (CLS), Ciena (CIEN), Coherent (COHR), Credo Technology (CRDO), Fabrinet (FN), Lumentum (LITE), Micron (MU), SanDisk (SNDK), Seagate (STX) and Western Digital (WDC). That group includes makers of networking and storage gear, memory-chip companies and contract manufacturers.
“Quite simply, a rising capex tide will lift all boats,” Ackerman said. “It’s pretty evident that hyperscalers have bought into the significant business opportunity that can be generated by AI services, as hyperscalers are aggressively investing in gigawatt-scale AI factories that are distributed across regions.”
While graphics processing units, mostly from Nvidia, are leading the investment wave, makers of networking, storage and other gear will get a sales boost as well, he said.
Evercore ISI analyst Amit Daryanani sees positive implications for multiple tech hardware companies from the Alphabet, Meta and Microsoft reports.
In a client note Wednesday, Daryanani cited Amphenol (APH), Arista, Ciena, Dell Technologies (DELL), Seagate, Vertiv (VRT) and Western Digital as stocks with high or medium exposure to the heightened AI capex.
AI Stocks To Watch From Rising Capex
Fellow Evercore analyst Mark Lipacis raised his price targets on five AI-related chip stocks on Thursday: Astera Labs (ALAB), AMD, Arm Holdings (ARM), Broadcom and Nvidia.
JPMorgan analyst Samik Chatterjee said the capex reports from Google’s parent and other hyperscalers are “a positive tailwind for companies in our coverage with leverage to AI infrastructure spending,” he said. Those AI stocks include Amphenol, Arista, Celestica, Ciena, Coherent, Fabrinet, Flex (FLEX), Jabil (JBL) and Lumentum.
Fellow JPMorgan analyst Harlan Sur added other stocks to the list of beneficiaries of the AI capex. He named AMD, Astera Labs, Broadcom, Macom Technology Solutions (MTSI), Marvell Technology (MRVL), Micron, Nvidia and Western Digital.
Barclays analyst Tim Long said the capex increases are particularly positive for Arista Networks.
Raymond James analyst Simon Leopold also chimed in with a report on hyperscaler capex derivatives. He called out Arista, Celestica, Ciena, Coherent and Lumentum, among others, as beneficiaries.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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