AI Infrastructure Stocks Outperform Nvidia’s 2025 Projections

While Nvidia has captured the spotlight as the primary beneficiary of the artificial intelligence surge, with its market capitalization expanding nearly thirteenfold to $4.6 trillion since late 2022, a closer look at the broader AI infrastructure ecosystem reveals significant opportunities for other players. With major tech giants collectively earmarking a staggering $380 billion for data center and infrastructure development in the current year, and projections indicating sustained investment in the coming years, Wall Street is increasingly directing capital towards a diverse array of vendors poised to capitalize on this expansion. Manufacturers of memory, storage solutions, fiber-optic components, and enterprise hardware have witnessed substantial valuation increases, fueled by the insatiable demand for AI capabilities. As we look towards 2026, investors are closely monitoring these five companies, whose stock prices now reflect high growth expectations.

## Lumentum

Based in San Jose, California, Lumentum is a key provider of optical components, including switches and transceivers, essential for high-speed data transmission in fiber-optic networks. Traditionally serving telecommunications carriers and device manufacturers, Lumentum’s components are now critical for AI infrastructure. The architecture of AI data centers necessitates extensive interconnectivity between GPUs within racks, and as AI systems scale, the demand for rack-to-rack and even data center-to-data center optical connections will intensify.

Lumentum’s stock has seen a remarkable surge of 361% over the past year, pushing its market capitalization beyond $27 billion. Recent quarterly sales figures showed a robust 58% year-over-year increase, reaching $533 million. Michael Hurlston, CEO of Lumentum, highlighted the significant contribution of AI demand to their growth, stating that approximately 60% of the company’s revenue now stems from cloud and AI infrastructure, encompassing both their laser chips and optical transceivers for data centers and the long-haul networks connecting them. While revenue growth is projected to remain strong at 58% for the fiscal year ending in June, analysts anticipate a moderation to 32% and 15% in the subsequent two years, as per LSEG data.

## Western Digital

As one of the leading manufacturers of hard disk drives (HDDs), alongside Seagate and Toshiba, Western Digital has experienced a significant uplift, with its shares climbing 296% year-to-date. The burgeoning AI revolution necessitates not only immense processing power but also vast storage capacity for AI applications and the ever-growing datasets they process. Data centers are thus becoming increasingly reliant on robust storage solutions.

While Western Digital also produces solid-state drives (SSDs), its core strength lies in HDDs, which offer terabyte-scale storage through magnetic disk technology. CEO Irving Tan emphasized the crucial role of HDDs in the AI ecosystem, describing them as the most reliable, scalable, and cost-effective solution for storing the data that fuels AI. He cited an example of a hospital leveraging AI for analyzing seven billion images, underscoring the scale of data involved. In its latest quarterly report, revenue grew by 27% to $2.82 billion, with the company anticipating that increased sales of larger, higher-capacity drives for data centers will bolster profitability. Analyst projections indicate a revenue increase of approximately 23% for fiscal year 2026, followed by a slowdown to 13% in 2027. It is worth noting that Western Digital spun off its flash memory business as Kioxia, which now holds a significant market valuation.

## Micron Technology

Micron Technology, a prominent U.S.-based memory producer alongside global giants Samsung and SK Hynix, plays a vital role in the AI infrastructure. AI servers require substantial amounts of memory to efficiently store and process complex AI models. High-bandwidth memory (HBM), an advanced form of DRAM, is integrated into AI accelerators from manufacturers like Nvidia and AMD, leading to unprecedented demand and a global shortage that has driven up prices.

Micron has significantly surpassed Wall Street expectations for both sales and earnings in recent quarters, contributing to a 228% rise in its stock price for the year. Sumit Sadana, Micron’s Chief Business Officer, reported that the company is “more than sold out” of its memory chips. In a strategic move to prioritize AI demand, Micron even discontinued its consumer-focused memory and solid-state drive lines in December. Analysts at Morgan Stanley described Micron’s recent performance as exhibiting the “best revenue and profit upside in the history of the U.S. semis industry,” second only to Nvidia. Projections suggest revenue could nearly double in the year ending in August, followed by a considerable deceleration to 24% growth in fiscal year 2027 and less than 1% in 2028, according to LSEG.

## Seagate Technology

Founded nine years after Western Digital, Seagate Technology is another significant beneficiary of the surging demand for data storage solutions. The company’s stock has appreciated by 228% this year. In its fiscal third quarter ending October 3, sales increased by 21% to $2.63 billion, with approximately 80% of its revenue generated from the data center market.

CEO Dave Mosley articulated the transformative impact of AI on hard drive demand, stating that AI is “reshaping hard drive demand by elevating the economic value of data and data storage.” Analysts at Bank of America noted in November that Seagate is unlikely to carry excess inventory, as any additional shipments are quickly claimed. They also highlighted that customers are increasingly engaging in build-to-order contracts with firm volume and price commitments, particularly hyperscale and mass-capacity clients. Similar to Western Digital, Seagate is forecast to experience revenue growth of 21% for the current fiscal year, followed by approximately 15% and 6% increases in the subsequent two years, as per LSEG.

## Celestica

Established in 1994 as an IBM subsidiary, Celestica specializes in manufacturing network switches that manage data flow and traffic. The company’s stock has surged 213% this year, driven by its significant role in supplying critical components to major AI players. In the third quarter, sales climbed 28% to $3.19 billion. Analysts project revenue growth to accelerate from 26% in the current year to 33% in 2026 and 34% in 2027, according to LSEG.

Celestica CEO Robert Mionis revealed that a hyperscale customer recently engaged the company to develop components for liquid-cooled rack-scale computers designed for AI, with mass production slated to commence next year. A key growth driver for Celestica is the increasing demand for Application-Specific Integrated Circuits (ASICs). While less flexible than Graphics Processing Units (GPUs), ASICs can offer more cost-effective performance for specialized AI workloads. Mionis emphasized that “Our largest and fastest-growing market presence is within AI data centers, supporting high-performance networking and custom ASIC AI/ML compute platforms.” Analysts at Goldman Sachs pointed out Celestica’s role in supplying components for Google’s TPUs, anticipating that the company will benefit in 2026 as a leading provider of Google TPU rack-level solutions.