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AI Investment Surge: Top U.S. Infrastructure Developers to Watch
The U.S. technology sector, particularly in the artificial intelligence (AI) realm, is showing signs of recovery after the January sell-off led by DeepSeek. The company asserted that its open-source large language model R1 closely resembles the abilities of major U.S. players such as OpenAI’s GPT-4, Meta’s Llama, and Google’s Gemini, but at significantly lower costs.
Despite initial panic in the market, technology experts have noted that a complete Chinese dominance over the U.S. AI landscape has not yet been realized. As the fourth-quarter 2024 earnings season unfolds, major tech firms are reaffirming commitments to invest hundreds of billions in AI infrastructure in the coming years.
DeepSeek has raised concerns specifically regarding AI-infrastructure developers like chipset manufacturers and data center equipment suppliers. However, substantial investments from large tech companies, supported by the Trump administration, are paving the way for a promising future for AI infrastructure developers.
Currently, we suggest five U.S.-based AI infrastructure stocks with positive Zacks Ranks that are worth buying and holding long term. These stocks include NVIDIA Corp. NVDA, Broadcom Inc. AVGO, Constellation Energy Corp. CEG, Marvell Technology Inc. MRVL, and Innodata Inc. INOD.
Strong Capital Investments in AI Infrastructure
Four of the “magnificent seven” stocks are planning to invest an astonishing $325 billion in capital expenditures for AI infrastructure by 2025. This represents a 46% year-over-year increase in spending in the AI sector.
During their latest earnings calls, the CEOs of Meta Platforms Inc. (META), Microsoft Corp. (MSFT), Alphabet Inc. (GOOGL), and Amazon.com Inc. (AMZN) emphasized that these significant investments are crucial to stay competitive, given the exponential growth in demand for AI technology. Bloomberg Intelligence has projected that generative AI spending will leap from $67 billion in 2023 to $1.3 trillion by 2032.
The data center industry is also flourishing, with major players like Microsoft and Amazon partnering with nuclear energy companies to manage the substantial electricity needs of these facilities. A report from Rystad Energy forecasts that the expansion of both traditional and AI-driven data centers, coupled with chip foundries, will increase the total U.S. electric power demand by 177 TWh from 2023 to 2030, ultimately reaching 307 TWh.
Five Promising U.S. AI-Infrastructure Stocks
The five U.S.-based AI infrastructure developers highlighted here possess the potential to capitalize on strong investments from major tech corporations. Over the long term, these companies are expected to see rising stock prices. Each selected stock currently holds either a Zacks Rank #1 (Strong Buy) or #2 (Buy). See the complete list of today’s Zacks #1 Rank stocks here.
Below is a chart showing the price performance of our five selections over the past month.
Image Source: Zacks Investment Research
NVIDIA Corp. – A Leader in AI Chipsets
With a Zacks Rank of #2, NVIDIA is a dominant force in the generative AI chipset market, continually innovating its products. The demand for its Hopper chips remains high as the industry shifts from central processors to NVIDIA-made accelerators.
NVIDIA’s upcoming AI chip, Blackwell Ultra, is set to significantly impact the market, with expected availability in data centers by the fourth quarter of fiscal 2025. The B200 chip within this series boasts speeds 30 times faster than its predecessor.
At the Consumer Electronics Show 2025, NVIDIA unveiled the GeForce RTX 50 Series GPUs, powered by its advanced Blackwell architecture, which enhances AI-driven rendering for gaming and creative tasks.
NVIDIA aims for a $1 trillion market opportunity for its GPUs from the escalating need for AI-powered data centers. The company anticipates delivering more Blackwell chips than initially estimated in the fiscal fourth quarter of 2025.
Expected revenue for NVIDIA shows a growth rate of 48.7% for the current year ending January 2026, while earnings growth is projected at 43.2%. The Zacks Consensus Estimate for the current year’s earnings has improved by 1% in the last month. With a long-term earnings growth rate of 20%, NVIDIA’s performance outstrips the S&P 500’s 12.4%.
Currently, NVIDIA has a forward price-to-earnings (P/E) ratio of 30.86, compared to the industry average of 32.26 and the S&P 500’s 18.52. Additionally, NVIDIA’s return on equity stands at 114.83%, markedly higher than the industry’s 6.45% and the S&P 500’s 16.82%.
Broadcom Inc. – Riding the AI Wave
Broadcom, also holding a Zacks Rank of #2, has seen strong demand for its AI accelerators and networking solutions, with AI connectivity revenues growing fourfold, thanks to its Tomahawk and Jericho products. Broadcom provides essential chips and accessories fundamental to data center infrastructure.
Acquiring VMware has enhanced Broadcom’s infrastructure software solutions. This partnership has proven fruitful, attracting clients like Alphabet and Meta Platforms. Moreover, relationships with key partners such as Arista Networks, Dell Technologies, and Juniper have further fueled Broadcom’s growth.
Broadcom is projecting a revenue growth rate of 18.3% and earnings growth of 29.6% for its fiscal year ending October 2025, with a recent Zacks Consensus Estimate for earnings showing an upward revision of 0.2% in the last month.
Long-term growth for Broadcom is expected to be 17.8% compared to the S&P 500’s 12.4%. The company boasts a return on equity of 28%, significantly higher than the industry’s 0.69%, along with a current dividend yield of 1.05%.
Constellation Energy Corp. – Focusing on Clean Energy
With a Zacks Rank of #2, Constellation Energy is a leading clean energy company in the U.S., particularly emphasizing nuclear energy. The company plans to invest $5.1 billion by 2025 to secure nuclear fuel and boost inventory levels, targeting a complete reduction in greenhouse gas emissions through innovative technologies.
In late 2024, Microsoft entered into a collaboration…
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Constellation Energy Partners with Microsoft to Revitalize Three Mile Island
Constellation Energy (CEG) has entered into a significant 20-year agreement with Microsoft to restart the Three Mile Island nuclear plant in Pennsylvania. This $1.6 billion investment will breathe new life into the reactor, which has been inactive since 2019, aiming to support Microsoft’s growing demand for carbon-free electricity at its data centers.
Constellation Energy’s Mixed Growth Outlook
Currently, Constellation Energy is expected to experience a revenue decline of 7.9%, while earnings are projected to grow by 10.5% this year. Over the past month, the Zacks Consensus Estimate for its earnings has risen by 1.4%. In the long term, conclusive figures show a 15.8% growth rate for earnings over the next three to five years, outpacing the S&P 500’s 12.4%. As of now, the company offers a modest dividend yield of 0.46%.
Marvell Technology Sees Surge in Demand
With a Zacks Rank of #2, Marvell Technology (MRVL) is thriving thanks to heightened demand in the data center sector. In its most recent quarter, MRVL reported a staggering 98% year-over-year increase in data center revenues, combined with a 25% growth sequentially. This surge is largely driven by strong sales in AI-related products such as PAM and ZR electro-optics.
Furthermore, Marvell is well-positioned in the solid-state drive controller market amid a growing need for storage solutions, particularly as unstructured data continues to expand rapidly. As inventory levels normalize, growth is anticipated within the enterprise networking and carrier infrastructure segments.
Expectations for Marvell indicate a remarkable 40.6% revenue growth and a substantial 73.7% increase in earnings for the current fiscal year ending in January 2026. The Zacks Consensus Estimate for its current-year earnings has seen a 0.7% uptick in the past week, while the company’s long-term earnings growth rate is projected at 33.7%, significantly higher than the S&P 500 average.
Innodata Inc. At the Forefront of AI Data Solutions
Zacks Rank #1 Innodata operates as a global data engineering firm with a broad presence in the U.S., U.K., Netherlands, Canada, and beyond. The company is divided into three segments: Digital Data Solutions (DDS), Synodex, and Agility.
The DDS segment specializes in AI data preparation services, including creating and annotating training data, as well as deploying AI models. Additionally, Innodata offers comprehensive data engineering support like data transformation and compliance.
Significantly, Innodata has focused its efforts on assisting major tech firms in developing generative AI models. This strategy bore fruit in the third quarter of 2024 when it reported revenues of $30.6 million from one key customer in the tech sector.
Looking ahead, Innodata projects a revenue growth rate of 34.6% and a modest earnings growth of 5.1% for the current year. The Zacks Consensus Estimate for its current-year earnings has increased by 15.5% over the past two months, with an impressive return on equity of 44.38%, significantly outperforming the industry average of 11.78% and the S&P 500’s 16.82%.
Zacks Unveils Top Stocks for 2025
Zacks has recently released a list of its top 10 stocks for 2025. These selections, carefully chosen by Director of Research Sheraz Mian, have performed exceptionally well, yielding a remarkable total return of +2,112.6% since 2012, far surpassing the S&P 500’s +475.6% during the same period. Mian has sifted through 4,400 companies to identify the best opportunities to buy and hold for the coming year. For investors, this is a prime chance to explore stocks with high potential for growth.
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Constellation Energy Corporation (CEG): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Marvell Technology, Inc. (MRVL): Free Stock Analysis Report
Broadcom Inc. (AVGO): Free Stock Analysis Report
Innodata Inc. (INOD): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
