Nvidia, Micron, Alphabet poised for AI spending surge

An investment strategist argues that three companies stand out as the strongest plays on accelerating AI infrastructure spending: Nvidia, Micron Technology, and Alphabet.

Nvidia has been the dominant player since the data center infrastructure boom started in 2023. Its GPUs sit at the center of nearly every new data center and have become the industry standard for their flexibility and reliability. Last quarter, Nvidia reported an 85% revenue increase, and Wall Street analysts project nearly 100% growth next quarter — all without meaningful sales to China, which could open as an additional market soon. Nvidia's management has told investors to expect $1 trillion（約160兆円） in data center capital expenditures from the four largest AI hyperscalers next year, up from $650 billion（約100兆円） this year. Despite these results and growth outlook, Nvidia trades at 23.7 times forward earnings, just barely above the S&P 500's forward P/E of 21.7. The analyst views this as a modest premium for one of the market's strongest growth stocks.

Micron manufactures NAND and DRAM memory chips, both essential for AI data centers but in short supply. The company and its competitors lack sufficient production capacity to meet surging demand, and building new foundries takes considerable time. As a result, memory prices have climbed sharply, boosting both revenue and profits. Micron management expects the memory chip market to remain tight beyond 2027, signaling years of sustained pricing power and margin expansion ahead. Micron trades at just 12.3 times forward earnings, the analyst notes, making it attractive relative to its growth prospects.

Alphabet presents a different angle: rather than supplying infrastructure, it is the customer spending hundreds of billions annually to build a cloud computing empire. Its Google Cloud segment grew 63% year over year last quarter and is expanding much faster than any other division. The analyst reasons that if Alphabet can maintain this growth rate while preserving profit margins, its massive capex investment will deliver strong long-term returns. The strategist concludes that all three stocks merit purchase given the multi-year tailwind from AI infrastructure construction just beginning to scale across the industry.

The AI infrastructure buildout that began in 2023 remains in its nascent stage, with neither universal adoption nor adequate computing capacity yet in place. Major hyperscalers are signaling continued aggressive spending: management expects $1 trillion（約160兆円） in data center capex next year compared with $650 billion（約100兆円） this year, a 54% increase. Alphabet has separately confirmed it will raise capex "significantly" in 2027. This spending surge creates a multi-year tailwind for the companies that supply the hardware and chips powering these facilities.

Nvidia's dominance in GPU supply for AI data centers appears durable despite its explosive growth (85% last quarter, nearly 100% projected next quarter). Its valuation of 23.7 times forward earnings is only marginally above the broad market's 21.7, which the analyst views as a modest premium for sustained growth. Micron occupies a different position: the memory chip market is constrained, manufacturers lack sufficient production capacity, and new foundries take time to build. Micron's management expects this shortage to continue past 2027, supporting elevated pricing. Alphabet's case rests less on supplying others than on capturing cloud revenue from its own capex; its Google Cloud segment is growing 63% year over year and is outpacing every other division, which could reshape the company's earnings mix over time.