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Tech companies will continue to deploy greater numbers of GPUs for AI workloads, which is bullish for Nvidia.
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Iren Limited could be swamped with demand as companies scramble to secure more data center capacity for their AI needs.
There is a massive investment cycle underway in artificial intelligence (AI). Morgan Stanley estimates that spending on AI infrastructure could exceed $3 trillion in the next three years.
The companies providing the chips and data centers to enable the AI transformation of the economy could be very rewarding investments for potentially decades to come.
Here are two top AI infrastructure stocks to consider buying right now.
Cloud services, enterprises, and governments are desperate to get their hands on as many graphics processing units (GPUs) as they can. These chips are essential for the most advanced AI training and inferencing workloads, and Nvidia (NASDAQ: NVDA) has controlled as much as 90% of this market.
Investors may be hesitant to buy Nvidia stock after its monstrous run, climbing 31,000% over the last 10 years, but it's the most valuable company in the world for a reason. AI companies have deployed thousands of Nvidia GPUs to train AI, but that number is going to keep growing as these companies chase the achievement of super-human intelligent AI capabilities, which will require substantially larger clusters of chips potentially numbering in the millions.
For example, OpenAI CEO Sam Altman said in July that it will exceed 1 million GPUs deployed by the end of 2025. The two companies have collaborated to optimize OpenAI's open-source GPT-oss models on Nvidia chips. Altman added that OpenAI will have to figure out how to "100x" that amount, or utilize 100 million GPUs. This underscores the long-term opportunity for Nvidia.
Competition among cloud companies and AI researchers is driving Nvidia's growth. Nvidia's data center business continues to grow at insanely high rates for a company of this size. Sales to data centers made up 88% of Nvidia's revenue last quarter and grew 56% year over year.
Because Nvidia enjoys such a dominant position in the GPU market, it is raking in enormous profits, which fuels more innovation. It offers several computing platforms for different markets, such as Jetson for training robots and Nvidia IGX for industrial and medical edge AI applications.
It's amazing that Nvidia stock can still be bought for just 28 times next year's earnings estimate. This is a bargain for a company analysts expect to grow earnings at an annualized rate of 36% in the coming years.