Market Recovery Fuels Optimism for AI and Tech Stocks

Stocks have rebounded as fears over increasing tariffs and geopolitical tensions ease, ushering in hopes for a more stable global trade environment. The tech-heavy Nasdaq Composite saw a significant drop, plunging 24% from recent highs, particularly affecting major tech names.

Sector-specific issues have also affected recent successes like Nvidia (NASDAQ: NVDA) and Dell Technologies (NYSE: DELL), both leaders in the artificial intelligence (AI) domain. Concerns regarding declining investments for AI infrastructure may have been premature, suggesting a potential resurgence for stocks like Nvidia, Dell, and other emerging players as the year advances.

Growth in AI Investments

President Donald Trump has rolled back some tariffs, notably reducing the tariffs on China from 145% to 30% for at least a 90-day negotiation period. This development is fostering optimism that companies will continue to invest in AI infrastructure.

Many leading tech firms anticipate maintaining or even increasing investments this year. Blackstone president Jonathan Gray believes that data center usage will continue to expand. His firm offers a unique perspective, investing across a diverse range of technology sectors.

Gray stated in a recent CNBC interview, “I think this trend is powerful. I think it will continue,” highlighting strong demand in the data center investment landscape.

Much of this demand is driven by Nvidia’s cutting-edge chips and AI software. Recent news included Nvidia securing a significant customer: Humain, a newly formed AI company backed by Saudi Arabia’s sovereign wealth fund. Humain intends to purchase 18,000 of Nvidia’s latest Blackwell chips along with networking and the Omniverse cloud platform.

This deal marks the first phase of a planned 500-megawatt data center, which will utilize hundreds of thousands of Nvidia GPUs over the next five years, showcasing Nvidia’s potential for future growth.

Positive Outlook for Dell Technologies

Orders like these will not only support Nvidia but also enhance the future earnings of server provider Dell Technologies. While Dell is not solely focused on AI—it also sells PCs and various tech products—its growth is significantly propelled by its AI-optimized server shipments. These sales surged to $2.1 billion recently, up from $800 million in the previous year, with a reported $4.1 billion AI backlog exiting the fiscal 2025 fourth quarter.

Dell is also committed to returning capital to shareholders, having raised its annual dividend by 18% in fiscal 2025, following a 20% increase the previous year. Despite a more than 50% increase in share price since early April, the current dividend yield is around 2%. Investors can anticipate the upcoming earnings report on May 29, with management likely to provide a positive outlook for further growth.

CuriosityStream: An Emerging Player

CuriosityStream (NASDAQ: CURI) is a lesser-known entity, currently considered a small-cap stock with a market cap of approximately $320 million. Despite being a media and entertainment company, CuriosityStream has emerged as an attractive option in the AI sector.

Founded by John Hendricks, who also established The Discovery Channel’s parent company, CuriosityStream aims to present premium factual content that engages and informs. Its content, essential for training AI large language models (LLMs), is increasingly sought after, positioning CuriosityStream as a growth contender in a competitive market.

The company’s revenue growth has prompted it to initiate dividends last year, followed by several increases and a planned one-time special dividend after recently posting its first net profit. CuriosityStream had a solid financial position with $39 million in cash and no debt as of March 31, allowing it to reward shareholders.

Management forecasts continued revenue growth, aiming for a 33% increase year-over-year in the second quarter. As adjusted free cash flow rises, it can keep rewarding shareholders while investing in growth. The forward dividend yield stands at an impressive 5.7% at a share price of $5.62, excluding an additional one-time payout expected in June.

Overall, all three companies are benefiting from increasing AI investments. Nvidia may represent the safest bet with stable business secured for the foreseeable future. CuriosityStream has recently gained traction, with shares doubling over the last month. Although some of its growth potential may already be priced in, it presents an intriguing opportunity for risk-tolerant investors, especially with anticipated increases in licensing revenue.

Howard Smith has positions in CuriosityStream, Dell Technologies, and Nvidia. The Motley Fool has positions in and recommends Blackstone and Nvidia. The Motley Fool has a disclosure policy.

The viewpoints expressed here are those of the author and do not necessarily represent the views of Nasdaq, Inc.