Eye for AI: Stocks recover as tech giants spend big on AI infrastructure — what lies ahead?

Shares of companies that provide infrastructure for artificial intelligence (AI) development bounced back from a tumble earlier this year, as spending by Big Tech restores investor confidence in the tumultuous sector, reported Bloomberg.

Goldman Sachs Group tracked two baskets — one tracking AI data centres and electrical equipment stocks, which rose 52 per cent, and another that follows shares of companies that supply power for data centres, which also rose 39 per cent. Both went up from their April lows.

Individual standouts in these baskets include Vertiv Holdings Co, which has notched a 94 per cent gain since April 4, as well as Constellation Energy Corp, which went up 75 per cent in that same period.

Tech giants boost spending on AI Infrastructure

The world's largest technology companies, including Amazon, Alphabet, Microsoft and Meta are continuing to spend big on artificial intelligence, mitigating doubts over whether money will continue flowing to the firms that are essential to AI infrastructure, said Bloomberg.

Forecasts for capital expenditures to support AI demand are up by 16 per cent since the beginning of the year, according to Bloomberg Intelligence’s Robert Schiffman.

“Earnings season reminded investors that generative-AI doesn’t run on buzzwords — it runs on concrete, copper and gigawatts,” CEO of Roundhill Financial Dave Mazza told Bloomberg.

What led to upturn in AI Infrastructure?

Shares of AI infrastructure companies are witnessing an uptick over the business potential of artificial intelligence which sparked a spending spree on data centres to fund the development of AI programs like OpenAI's ChatGPT and Anthropic’s Claude, reported Bloomberg.

A strong start in 2025 unravelled as worries over competition from China’s DeepSeek startup and broader uncertainty over global trade led investors to be wary of the billions of dollars of investment made during the period. Concerns that tech giants such as Microsoft were walking away from data centre projects further pushed the selloff.

Investor sentiment revived

Investor sentiment improved when President Donald Trump announced the pause of most of the tariffs he had rolled out in early April, which fuelled a rally that pushed the S&P 500 Index near an all-time high hit in February, as per Bloomberg data.

Another reason is the latest earnings season which helped investors gain confidence in the sector, as big tech companies indicated they were continuing to lay money out on AI development. Among these was Meta, which signalled that the hundreds of billions in AI spending it had flagged earlier in the year was still on track, said Bloomberg.

The bottom line

Recent corporate deals also suggest that spending on AI infrastructure remains intact. Amazon plans to invest $10 billion in North Carolina to expand its data centre infrastructure to support AI and cloud computing technologies, reported Bloomberg.

Deputy chief investment officer at Franklin Templeton Investment Solutions, Max Gokhman told Bloomberg that investor confidence in AI could take another hit if the trade war once again heats up and sparks concerns that a downturn in global economic growth will see companies cut on AI spending.

“If the economy falls into a recession, margins will be under pressure, companies will be forced to lay off workers and cut spending on AI,” Gokhman told Bloomberg.