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“How much would it cost me to buy you?”
That’s how Cisco Systems Inc. (CSCO) CEO John Chambers greeted the founder of telecom startup Cerent Corp. in 1999.
Not his company. You.
Cerent had only about $10 million in annual sales, but Cisco paid roughly $6.9 billion in stock because Chambers believed the technology and that founder were critical to the internet buildout.
At the time, Chambers had a simple solution whenever he found a bottleneck:
Buy it.
By the late 1990s, the internet was growing so fast that Cisco couldn’t build products quickly enough to keep up. So it started buying competitors, technologies, and choke points throughout Silicon Valley.
That strategy helped make Cisco the most valuable company in the world for a brief moment in March 2000.
Most people remember what happened next. I remember what came before.
The Last Time Capital Moved This Fast
The internet buildout was real. Networks got built, servers got installed, and infrastructure spending exploded. Investors who understood that trend made fortunes.
I’ve been thinking about Cisco lately because we’re watching the same movie again.
The AI buildout is real. First-quarter S&P 500 earnings grew nearly 29% from a year ago — more than double what analysts expected. Analysts keep revising estimates higher. The spending behind this is staggering and it’s accelerating.
That’s what I want to talk about today.
In this piece, I’ll show you four stocks prospering from the AI buildout beyond Nvidia and Micron…
Why I believe this infrastructure boom is still early…
And why the hardest part of the AI trade isn’t finding the right companies. It’s staying with them.
Everybody Wants the Next Nvidia. That’s Exactly the Wrong Way to Think About This.
I’ve been investing through major technology shifts for nearly five decades. I was using computers to analyze stocks in the 1970s, long before it became common on Wall Street. Over the years, my quantitative systems helped identify winning stocks such as Apple Inc. (AAPL) and Nike Inc. (NKE) — and Nvidia Corp. (NVDA) and Microsoft Corp. (MSFT) — long before they became household names.
In the late 1990s, everybody wanted the next internet stock. Today, everybody wants the next AI stock.
That’s understandable. Nvidia has become one of the most successful investments in modern market history.
But investors often become so focused on one company that they miss the broader trend unfolding around it.
Artificial intelligence is no longer just a Nvidia story. There are a lot more AI-related stocks prospering now. Memory companies, networking companies, power-generation companies (we used to call those “utilities”)… all are benefiting.
Why? Because AI requires an enormous amount of infrastructure.
The average investor sees ChatGPT or Claude on their browser and thinks software. I see hundreds of billions of dollars flowing into an entirely new computing architecture.
What the Earnings Numbers Are Actually Saying About the AI Buildout
To appreciate the scale, one proposed AI data-center project in Utah would cover nearly three times the area of Manhattan. Similar projects are being planned across the country. These facilities will require thousands upon thousands of chips, servers, and networking systems.
That’s why companies like Micron Technology Inc. (MU) have become so important.
Most investors still think of it as a cyclical memory-chip company from the middle of the country. But on May 26, Micron became Boise, Idaho’s first trillion-dollar company.
Wall Street sees something different. Sales are expected to grow more than 250%. Earnings are expected to rise more than 900%.
Those aren’t normal numbers. They’re what happens when a major technological shift is underway and demand overwhelms supply. Micron has reportedly sold out much of its high-bandwidth memory production under long-term contracts, and analysts expect supply shortages to persist for years.
It’s also why I want you to pay attention to companies like Dell Technologies Inc. (DELL), Hewlett Packard Enterprise Co. (HPE), Ciena Corp. (CIEN)… and, yes, Cisco. These aren’t the first names investors think about when they hear “AI,” but they’re increasingly prospering from the buildout.
The opportunity is getting bigger. Not smaller. When a major investment theme spreads beyond a handful of stocks and starts lifting entire industries, it usually means the trend is becoming more durable and more profitable — not less.
That’s what we’re seeing right now.
The Real Risk to Your AI Infrastructure Stocks Isn’t What You Think
I focus on a combination of fundamental and quantitative measures — sales growth, earnings growth, analyst revisions, institutional buying pressure. That’s how my Stock Grader system has identified winning stocks for well over 40 years.
And right now, those indicators continue to point in the right direction. I think many of the best AI and data-center stocks still have substantial upside ahead of them before the year is over.
But being bullish doesn’t mean being complacent.
The spending behind this boom is staggering. Microsoft, Amazon.com Inc. (AMZN), Alphabet Inc. (GOOG), and Meta Platforms Inc. (META) are expected to spend roughly $700 billion on AI infrastructure this year alone. That’s data centers, networking equipment, chips, power generation, and everything needed to support the next generation of AI applications.
Those aren’t startup projections. They’re some of the largest and most successful companies in the world committing enormous capital because they believe AI will reshape the global economy.
The biggest risk facing investors right now isn’t that AI suddenly becomes less popular. It’s not that companies stop spending on data centers. And it’s not that earnings suddenly collapse.
The bigger risk is that investors get shaken out of fundamentally superior stocks during perfectly normal periods of volatility.
I’ve seen it happen throughout my career. A stock pulls back. The headlines get scary. Investors become nervous. They sell. Six months later, the stock is substantially higher.
The late 1990s were full of those moments. Even the biggest winners experienced sharp pullbacks from time to time. Investors who stayed focused on the long-term trend were rewarded. Investors who reacted emotionally often weren’t.
I think we’re approaching a similar period now. The market remains healthy, but summer can get bumpy. Trading volume thins out. Volatility increases. Short sellers become more aggressive.
That’s normal.
The Hard Part of the AI Infrastructure Trade Is Staying With It Through Volatility
And it’s one reason I’ve been spending so much time with Keith Kaplan and the team at TradeSmith. Over the past year, Keith and I have been exploring a new AI-enhanced approach that combines my Stock Grader system with TradeSmith’s pattern-recognition technology. What interested me wasn’t the technology itself. It was the results.
More importantly, it showed how investors can stay with opportunities like Dell, HPE, Ciena, and Cisco when volatility inevitably shows up. Because the hard part isn’t finding promising AI stocks anymore. The trend is staring us in the face. The hard part is staying invested when the headlines turn negative and investors start questioning the same companies they loved a month earlier.
That’s exactly what Keith and I discussed at our free event last week. We showed investors how we’re using AI to become more tactical and amplify the gains you can make with the stocks I recommend.
You can catch the replay of that event right now and get access to a “lite” version of this new system.
Whether it’s Micron, Dell, HPE, Ciena, Cisco — or another company prospering from the AI buildout — the opportunity is still much bigger than most investors realize.
The challenge isn’t finding the trend.
The challenge is staying with it.
