The artificial intelligence (AI) space remains rock-solid supported by an extremely bullish demand scenario. Five of the “magnificent 7” hyperscalers raised their AI capital expenditure budget to $750 billion for 2026. This figure is set to cross $1 trillion next year and rise further beyond 2027.
Moody’s estimated more than $3 trillion in capital investment for AI data centers by these five giant hyperscalers in the next five years. We recommend five major AI infrastructure stocks that are going to benefit from this massive capex of hyperscalers. Moreover, these stocks suffered to a big extent in the past month due to AI-trade volatility. As a result, they are now available at an attractive valuation.
These are: Micron Technology Inc. MU, Seagate Technology Holdings plc STX, Western Digital Corp. WDC, Sandisk Corp. SNDK and Vertiv Holdings Co. VRT. Each of our picks currently carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Micron Technology Inc.
Zacks Rank #1 Micron has been benefiting tremendously from the enormous application of AI in day-to-day life, which has pushed up the demand for memory chips. This has resulted in more AI semiconductor sales, implying the need for multiple AI memory chips to operate. Flash memory technologies like DRAM and NAND are used in AI chips, enabling them to perform optimally.
This has pushed up the demand for AI-enabled memory chips. In their last earnings reports, all five major hyperscalers highlighted a shortage of memory and storage chips, resulting in soaring prices of these products. As a result, MU benefits significantly.
MU’s gross margin climbed to 84.9% in the last reported quarter from 74.9% in the prior quarter and 39% in the year-ago period. This proved how the high-bandwidth memory (HBM) shortage is helping these high-end memory developers to increase prices in a world of AI-powered data center boom.
MU has meaningful exposure to AI, cloud data centers, industrial IoT and autonomous vehicles, all of which require increasingly advanced memory solutions. As AI adoption accelerates, demand for DRAM and NAND products continues to rise.
Micron has an expected revenue and earnings growth rate of 91.4% and more than 100%, for the next year (ending August 2027). The Zacks Consensus Estimate for next year’s earnings has improved 3.4% over the last 30 days.
Seagate Technology Holdings plc
Zacks Rank #1 Seagate is benefiting from a shift in AI workloads from short-lived compute jobs to persistent data reuse. Inference, agentic applications, robotics and autonomous systems all create reasons to retain historical, video and sensor data. That supports a tiered storage model in which cost-efficient hard drives remain central.
STX’s AI workloads expand the need for persistent data. AI systems need context. In agentic applications, key-value cache data can be retained and reused across interactions, reducing the need to recompute information already generated. That dynamic is showing up in demand.
Seagate’s Mozaic 4 platform can support drives of up to 44 terabytes and is ramping with the two largest global cloud service providers. Mozaic 5, a five-plus-terabyte-per-disk platform, is scheduled for qualification shipments in late calendar 2027. STX has also pointed to a 50-terabyte drive as the next step after Mozaic 4.
Seagate has an expected revenue and earnings growth rate of 36.5% and 78.6%, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 0.4% over the last 30 days.
Western Digital
Zacks Rank #1 Western Digital has been witnessing strong execution amid intensified cloud and AI demand. WDC saw strong data center demand and increased adoption of high-capacity hard disk drives. This reflects its ability to scale reliable, high-capacity storage solutions to meet the needs of the AI-driven data economy.
As AI and cloud adoption accelerate, demand for higher-density storage continues to rise. WDC is meeting this demand through close collaboration with hyperscalers, delivering reliable, high-capacity drives at scale with strong performance and total cost of ownership.
Western Digital has an expected revenue and earnings growth rate of 38.1% and 82.9%, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 0.5% over the last 30 days.
Sandisk Corp.
Zacks Rank #1 Sandisk — a leading flash and advanced memory technology innovator — is set to maintain its astonishing momentum. SNDK has benefited from the structural shift toward AI computing, which requires significantly more NAND flash storage per deployment compared with traditional workloads.
AI training models and inference applications generate massive data volumes that demand high-performance enterprise solid-state drives, while edge devices need greater storage capacity to support on-device AI features.
This creates a favorable demand environment where SNDK can command premium pricing for its advanced technology products while maintaining disciplined supply allocation. SNDK’s BiCS8 quad-level cell storage product continues to advance through qualification with two major hyperscalers. The extended joint venture agreement with Kioxia Corporation through December 2034 positions Sandisk favorably in the AI memory and storage space.
Sandisk has an expected revenue and earnings growth rate of more than 100%, each for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 5.9% over the last 30 days.
Vertiv Holdings Co.
Zacks Rank #2 Vertiv has been benefiting from demand for AI infrastructure, expanding data center complexity and continued investment in capacity and technology. Management emphasized that AI and general compute demand are driving larger and more infrastructure-intensive deployments. VRT’s power, cooling and services portfolio positions it to support next-generation data center expansion.
VRT is focused on evolving power architectures as AI workloads require greater density. The company is developing solutions supporting multiple architectures, including 800-volt DC systems, while continuing to serve traditional AC-based deployments.
Vertiv is working with NVIDIA Corp. (NVDA) and VisionBay AI on AI data center deployments in Taiwan, including power, thermal and services solutions for NVIDIA GB300 systems. VRT said that these projects demonstrate demand for higher-density infrastructure.
Vertiv also emphasized thermal management capabilities, including liquid cooling and closed-loop cooling systems designed to reduce water usage in data center operations. Management said that these solutions expand its differentiation in long-term infrastructure services.
Vertiv has an expected revenue and earnings growth rate of 35.9% and 51.9%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.3% in the last 30 days.
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Western Digital Corporation (WDC): Free Stock Analysis Report
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Vertiv Holdings Co. (VRT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).