NVIDIA CEO Jensen Huang Delivers Keynote At Developers Conference

Nvidia CEO Jensen Huang (Justin Sullivan/Getty Images)

Getting high on AI supply

Three reasons the AI data center trade is so back

Shares of key chip, infrastructure, and energy providers are surging.

5/14/25 10:18AM

Major stocks linked to AI data centers are nearly all the way back to where they were when the S&P 500 peaked on February 19.

For data centers, you need:

Chips (Nvidia, Broadcom),
Supporting infrastructure (Arista Networks, GE Vernova, Vertiv Holdings), and
Power (Constellation Energy, Vistra).

These are certainly a nonexhaustive list of the players in each space, but more of a smattering of some of the highest-profile names that show just how much the AI data center trade is back. And boy is it back. On average, these stocks are less than 2% below their closing level when the benchmark US stock index hit its all-time high:

Of course, it’s worth noting that all these stocks peaked ahead of the S&P 500 — most around the time of the DeepSeek-induced AI freak-out — so they’re not as close to record highs, as a group.

But given how critical the AI trade has been to powering the overall market’s gains since 2023, the intensity of the rally is both impressive and important.

You can probably pin this performance to three critical factors (which apply much more to some parts of this supply chain than others):

Hyperscalers’ capex intentions (one of our most important charts to watch for 2025) have continued to go up and to the right. In fact, the expected growth in capex over the coming 12 months from Microsoft, Amazon, Alphabet, Meta, and Oracle has picked up steam throughout this year, particularly in the wake of a Q1 earnings season that saw these companies reaffirm their commitment to spending billions on capex. DeepSeek’s results be damned, Jevons Paradox rules the roost.

Recession fears are meaningfully lower in light of tariffs being dialed down. Many of these companies were effectively sacrificing free cash flow growth to go on this multiyear spending binge, which would have become a tougher sell in the event that their top-line results took a hit due to the macroeconomic environment souring substantially.
Despite “tariffs” being the most dominant force in shaping price action this year, access to foreign markets is seemingly improving for these companies, at least relative to the path we were on from the Biden administration. Regulations poised to go into effect are being scrapped, and we’re seeing that quickly bear fruit, with Nvidia and Super Micro, among others, reaching huge deals with big players in Saudi Arabia over the past 24 hours.

Tasha Matsumoto

Stocks continue to climb as surprise drop in private payrolls solidifies rate cut expectations

Despite a lackluster performance in many megacap tech names, all major US indexes climbed higher Wednesday.

CHICAGO, IL - MARCH 05: Benny, the mascot for the Chicago Bulls entertains during a break between the Bulls and the Boston Celtics at the United Center on March 5, 2018 in Chicago, Illinois.

Matt Phillips7h

Seagate, Western Digital stumble amid reports of customer resistance to AI

Hard disk drive makers Seagate Technology Holdings and Western Digital slumped Wednesday following a report from The Information that Microsoft is facing pushback from software clients who don’t want to pay more for AI-optimized products.

Microsoft contested the report, issuing a statement saying it hadn’t lowered sales quotas or targets. But the story hit squarely on the core issue facing the market right now: whether AI will ever produce enough revenue to pay for the massive investments hyperscalers are making.

As the tumble for hard disk makers shows, this is a market-wide issue. Share prices of hard disk makers have boomed amid expectations that the soaring demand for data storage related to AI investment will juice sales of these cheap storage devices for the foreseeable future.

Seagate and Western Digital are still the second- and third-best-performing stocks in the S&P 500 this year, with gains of roughly 200% and 250%, respectively.

Luke Kawa7h

Micron announces exit from consumer business to focus on AI demand

With a lot of AI mouths to feed amid a supply crunch for memory chips, Micron has made the decision to exit its consumer chip business (which goes by the brand name “Crucial”).

“The AI-driven growth in the data center has led to a surge in demand for memory and storage. Micron has made the difficult decision to exit the Crucial consumer business in order to improve supply and support for our larger, strategic customers in faster-growing segments,” said Sumit Sadana, EVP and chief business officer.

Memory chip prices have been surging thanks to demand from the AI boom, with South Korean memory giant SK Hynix saying that it’s already sold out all of next year’s production.

Per the press release, Micron will cease shipments of Crucial-branded items at the end of February 2026.

The product line has been a bit of a misnomer for the memory chip specialist as of late. Sales of Crucial-branded products fall under its mobile and client business unit, and the brand enjoyed a 25% jump in revenues year on year as of its most recent quarter. While impressive growth, that pales in comparison to the more than 200% surge in revenues for its cloud memory business unit, which focuses on high-bandwidth memory chip sales to hyperscalers.

Operating margins in the mobile and client business unit were 29% in its most recent quarter, compared to 48% for the cloud-centric division.

Max Knoblauch7h

Boeing falls as FTC requires it to divest Spirit AeroSystems assets to complete its $8.3 billion merger

The FTC said on Wednesday that the $8.3 billion merger between Boeing and its key supplier, Spirit AeroSystems, cannot proceed unless Boeing significantly divests Spirit assets.

Boeing shares fell more than 2% on the FTC’s proposed order, which said that Boeing should divest Spirit businesses that supply aerostructures (wings, doors, etc.) to rival Airbus. The assets, including personnel, will be divested to Airbus, the FTC statement said.

The moves would resolve antitrust allegations that Boeing’s acquisition of Spirit — which was spun out of Boeing in 2005 — would allow the plane maker to raise costs on Airbus or degrade its access to certain necessary parts. Boeing, the FTC alleged, could also have the ability to see sensitive information about its competitors.

The public now has 30 days to submit comments on the proposed order.

FTC Requires Boeing to Divest Several Spirit Assets to Proceed with Merger

The public now has 30 days to submit comments on the proposed order.

Luke Kawa9h

D-Wave Quantum rises as Evercore ISI initiates with “outperform” rating, calling it a “leading play” in industry

D-Wave Quantum is up big on Wednesday after Evercore ISI initiated coverage on the annealing quantum specialist with an “outperform” rating and price target of $44, implying upside of nearly 96% from where the stock closed on Tuesday.

Analyst Mark Lipacis called it a “leading play as the computing industry sees its next Tectonic Shift to a Quantum Computing Era,” highlighting three key things the firm offers to investors:

First quantum company with commercial revenues;
It’s a full-stack play, with services, software, and hardware;
And the ample cash hoard to develop its technology and potentially pursue M&A opportunities.

After its Q3 earnings report, CEO Dr. Alan Baratz told us that bolstering the firm’s gate model system (as opposed to its annealing system, which is its strength) was a priority.

“With the roughly $830 million in the bank, we have the resources to be able to invest more in that program, both internal investment and through acquisition,” he said. “We have one customer who has said, when you have a gate model system, I want it. So it expands our TAM [total addressable market], and it allows us to further grow our revenue.”

While commercial opportunities for publicly traded quantum computing companies have been relatively limited to date, particularly outside of D-Wave, Evercore’s Lipacis argues it’s not too early to invest in the industry.

“Each successive Tectonic Shift in Computing surprised investors with new workloads, and created stock performance of 100x-to-1,000x for full-stack ecosystem leaders,” he wrote. “To be clear, with over 40 quantum companies competing and no clear-cut leaders, we expect a shakeout, but to capture full-alpha, history shows you need to get in 10-years before the Tectonic Shift actually happens.”

He thinks that D-Wave will capture 12% of a quantum computing market that BCG estimates will be between $15 billion to $30 billion by 2035.