Key points
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Nvidia is positioned to capture a large share of AI infrastructure spending over the next five years.
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Digital Realty did $1.2 billion in bookings in 2025 and has a backlog of $1.4 billion.
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Credo Technology’s revenue tripled year over year in the last reported quarter.
Much has been said about the massive expenditure on artificial intelligence (AI) infrastructure. Metaplatforms, Alphabet, AmazonAnd Microsoft alone expects to spend a combined $700 billion this year on new data centers and the equipment that fills them, such as chips, networking equipment, server racks and cooling systems.
But take a moment to absorb that number: $700 billion. Fewer than twenty listed companies worldwide have such large market capitalizations. It is also more than the gross domestic product of many countries, including Israel, the United Arab Emirates and Sweden.
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Undoubtedly, a lot of money will change hands this year and in the years to come as tech companies build out their AI data centers. If you’re looking for some slam-dunk stock buying opportunities to capitalize on that trend, consider Nvidia (NASDAQ: NVDA), Digital real estate trust (NYSE: DLR)And Credo Technology Group (NASDAQ: CRDO).
A robot that sets the letters AI.
Image source: Getty Images.
Nvidia
Technology stocks have had a tough time in recent weeks. The biggest reason is that some analysts worry that companies like Meta and Alphabet are spending too much on AI infrastructure and won’t be able to monetize their investments. While I understand that argument, I think Nvidia stock is being unfairly punished.
First of all, Nvidia will remain perhaps the biggest beneficiary of the AI expansion, as it makes the most popular processors for training models and processing high-level computing workloads. CEO Jensen Huang has predicted that the AI infrastructure opportunity could be worth as much as $4 trillion over the next five years, and Nvidia is positioned to capture a significant share of that through its Blackwell and Vera Rubin processors.
Sales continue to increase in an astonishing manner. Revenue in the fourth quarter of fiscal 2026 (which ended Jan. 25) was $68.1 billion, up 73% from the prior year. Total revenue for fiscal 2026 was $215.9 billion, an increase of 65% over fiscal 2025.
But Nvidia, once valued at more than $5 trillion, has lost about $840 billion in market capitalization as tech stocks retreated. The stock is currently on sale, more than 16% below its all-time high, and fairly valued with a price-to-earnings ratio of around 21. I expect big things from Nvidia stock.
Digital real estate
While Nvidia provides the graphics processing units (GPUs) that run AI, Digital Realty provides data centers and connectivity services. The company operates more than 300 data centers in North America, Europe, Asia and Australia, and counts more than half of the Fortune 500 customers.
The company currently has 3 gigawatts (GW) of data center capacity, with an additional 5 GW of development capacity. It ended 2025 with $1.2 billion in bookings for the year, with a backlog of $1.4 billion.
CEO Andrew Power told analysts:
The introduction of ChatGPT a few years ago and the subsequent race between Gemini, Claude, Grok and others marked the beginning of a new chapter in the digital age, one defined by the convergence of AI, cloud, data and interconnection on a global scale. Cloud platforms continue to grow remarkably quickly, even at their extraordinary scale, underscoring the depth and sustainability of this demand.
Digital Realty is a real estate investment trust, which means it is required to distribute at least 90% of its taxable income as dividends to shareholders each year. At the current share price, the yield is 2.8%, providing investors with a stable source of income or the opportunity to reinvest dividends.
Credo Technology Group
Credo Technology doesn’t get the same level of attention as Nvidia, but you can argue that Nvidia’s chips wouldn’t be nearly as valuable without Credo’s contribution. The company provides high-speed data connectivity products for data centers, as well as 5G products and high-performance computing. The active electrical cables (AECs) use signal processors to move data quickly between chips and switches, reducing degradation and power consumption.
The company is growing even faster than Nvidia. Revenue in the third quarter of fiscal 2026 (which ended Jan. 31) rose 201.5% from a year ago to $407 million. Credo ended the quarter with $1.3 billion in cash, thanks in part to gross margins of 68.5%. Revenue for the current quarter is expected to be between $425 million and $435 million.
Should You Buy Nvidia Stock Now?
Consider the following before buying shares in Nvidia:
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Patrick Sanders has positions at Nvidia. The Motley Fool holds positions in and recommends Alphabet, Amazon, Digital Realty Trust, Meta Platforms, Microsoft and Nvidia. The Motley Fool has a disclosure policy.
