Hardware’s AI Moment Is Back—With a Vengeance
After a quiet spring where many AI infrastructure names pulled back amid profit-taking and macro jitters, the narrative has turned sharply bullish once again. Over the past six weeks, hardware-focused AI stocks—those powering and cooling the next generation of data centers—have staged an explosive rally. According to Goldman Sachs, its AI infrastructure supplier baskets have rebounded by 52% and 39%, erasing year-to-date losses and hitting fresh highs.
The catalyst? A clear signal from Big Tech that the AI arms race is only just beginning. Amazon, Microsoft, and Meta have all recently greenlit multi-billion-dollar expansions of their data-center footprints, fueled by increasing demand for generative AI inference, model training, and cloud services.
The big winners: companies providing the power, cooling, and connectivity infrastructure that make AI run. Shares of Vertiv Holdings (VRT) and Constellation Energy (CEG) are up approximately 94% and 75%, respectively, since early April.
Why This Matters for Investors
The recent price action marks a rotation within the AI trade—from software and semiconductors to the physical backbones of compute infrastructure. In other words: if Nvidia builds the chips, someone has to house, power, and cool them. That “someone” now looks like the most explosive corner of the AI thematic.
In Q1 2025 earnings calls, executives across the cloud giants pointed to accelerating capex plans, with AWS planning to spend $54 billion this year on infrastructure, up 38% YoY. Microsoft and Meta are not far behind, with a combined $80 billion earmarked for infrastructure investment by year-end. Much of that budget is expected to flow into power-intensive hyperscale data centers, which are now being fast-tracked across North America and Europe.
That spending spree has implications across a broad range of sectors—from electrical infrastructure and grid modernization to water-based cooling, HVAC, and real estate.
Goldman Sachs analysts noted in a June 6th research note:
“We’re witnessing a re-acceleration in infrastructure names tied to AI deployments. Unlike previous hype cycles, these are revenue-backed projects with physical requirements—cooling, power, backup energy—that cannot be abstracted or virtualized.”
Future Trends to Watch
1. Grid-Tied Opportunity
Constellation Energy’s 75% rally reflects an increasing investor appetite for regulated utility plays that can pass through surging demand from hyperscalers. Utilities with strong grid-tie capacity near urban data-center clusters may benefit from long-term purchase agreements and stable cash flows.
2. Thermal and Liquid Cooling
Companies like Vertiv are benefiting from rising demand for high-density cooling solutions. As chips get more powerful and generate more heat, traditional cooling systems are reaching their limits. Vertiv’s liquid cooling systems are increasingly being adopted by data centers preparing for future AI loads.
3. AI Real Estate and Zoning
With power requirements soaring, site selection and access to grid infrastructure are becoming competitive advantages. Real estate investment trusts (REITs) with strategic land holdings near substations or in low-regulation zones (e.g., Digital Realty, Equinix) are worth monitoring.
4. AI’s Environmental Cost
Some institutional investors are raising concerns about the long-term energy and water consumption associated with hyperscale AI growth. Expect ESG funds and green-tech plays to start overlapping more aggressively with the AI narrative as public scrutiny builds.
Credible References & Data Points
- Goldman Sachs AI Infrastructure Basket Report (June 6, 2025)
- Q1 2025 earnings calls from Amazon, Microsoft, Meta
- Bloomberg Terminal: VRT, CEG stock performance (April–June 2025)
- Reuters: AI infrastructure build-out trend
- McKinsey Insights: “AI’s Physical Layer: The Next Frontier” (May 2025)
Key Investment Insight
While many AI software and chip stocks have already priced in significant growth, the second-order beneficiaries—infrastructure providers—may still offer asymmetric upside. Investors should consider exposure to data-center cooling, electrical infrastructure, and utility stocks with visible AI-driven capex tailwinds. Screening for companies with hyperscaler contracts or geographic advantages (e.g., proximity to fiber, water, and substations) can offer a tactical edge.
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