The Bull Case for AI Infrastructure Stocks

By now, investors are familiar with the massive and rapid expansion of artificial intelligence (AI) and high-performance computing. While big tech companies steal headlines for their massive AI spend and client-facing AI chatbots, the real winners and the fastest-growing companies will be the AI infrastructure “Pick-and-shovel plays.” Pick-and-shovel plays Nebius Group (NBIS), IREN (IREN), Astera Labs (ALAB), TeraWulf (WULF), and Cipher Mining (CIFR) offer several advantages for investors. These companies profit regardless of which large language model wins the AI race, enjoy more stable and predictable revenues, and provide investors with broad industry exposure. Below are five reasons investors should buy these stocks now:

In 2025, CAPEX spending among hyperscalers such as Oracle (ORCL), Alphabet (GOOGL), Amazon (AMZN), Meta Platforms (META), and Microsoft (MSFT) totaled $390 billion. However, the latest estimates and guidance suggest that AI-related CAPEX spending will soar even higher to $515 billion in 2026. According to Ryan Detrick of Carson Research, AI spending now accounts for more than 2% of GDP, more than what was spent on the railroads in the 1850s. In fact, demand for AI computing power is so strong that a supply-and-demand imbalance is emerging for infrastructure providers.

Image Source: Carson Investment Research

Due to the rushed nature of the AI buildout, most AI infrastructure companies have been forced to spend significant up-front capital. However, as the “build-it-now” frenzy cools, these businesses will shift from the construction phase to the monetization phase. In time, this recurring rental income will supersede the high start-up costs. That said, investors can take solace in the massive expected top-line growth. For instance, Nebius Group is expected to grow full-year revenues by a mind-boggling 5x in 2026.

Image Source: Zacks Investment Research

A popular bear thesis among Wall Street investors is that AI spending will not ultimately be worth it, leading to a slowdown in CAPEX spending. However, the most recent data showsthat the proliferation of AI technology is driving an explosion in coding productivity. New website creation, Apple (AAPL) iOS apps, and GitHub Code have each increased by more than 30% over the past year.  

Image Source: Financial Times

This staggering increase in productivity ensures that big tech companies will continue their AI infrastructure spending sprees.