Artificial Intelligence (AI) has become an integral part of modern technology, revolutionizing industries with its ability to mimic human intelligence. At its core, AI enables machines to process vast amounts of data, recognize patterns, and make autonomous decisions. It encompasses machine learning (ML) and deep learning, allowing continuous improvement over time. The emergence of Generative AI (Gen AI) and Agentic AI has further enhanced its capabilities, making it a key driver of efficiency, automation and innovation. From autonomous vehicles to virtual assistants, AI is reshaping how businesses operate, offering faster decision-making, enhanced security, and improved customer experiences.
With AI adoption accelerating, global spending on AI infrastructure is projected to soar. U.S. tech giants, including Microsoft MSFT, Amazon AMZN, Alphabet GOOGL and Meta Platforms META, have been at the forefront in bringing remarkable advances to the AI technology well supported by powerful AI chips from NVIDIA NVDA and Broadcom AVGO. Rapid advancement in AI technology helps software developers like Palantir PLTR to offer better solutions for enterprises across a myriad of domains. AI is transforming industries such as robotics, healthcare, finance, cybersecurity and e-commerce, enhancing operational efficiency and delivering personalized experiences.
AI’s growth trajectory is unprecedented, with companies pouring billions into AI-driven innovation. According to Reuters, U.S. tech giants are estimated to spend roughly $250 billion on AI infrastructure, with META alone to spend between $60 billion and $65 billion in capital expenditures on AI in 2025. OpenAI, SoftBank and Oracle, along with the Trump administration, announced the Stargate joint venture, which intends to invest $500 billion over the next four years in building new AI infrastructure.
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NVIDIA offers GPUs that form the backbone of AI development. This Zacks Rank #2 (Buy) semiconductor giant has been benefiting from the accelerating usage of its GPUs, including Hopper and Ampere infrastructures. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
NVDA’s powerful GPUs are supporting the development of Large Language Models essential for running Gen AI. Not only U.S. hyperscalers but also Chinese AI company DeepSeek used its low-cost AI chip (H800) to develop its disruptive DeepSeek-V3 model, validating NVIDIA technological superiority. (Read More: NVIDIA Stock Plunges 21% in a Month: A Golden Buying Opportunity?)
NVIDIA is benefiting from strong demand for its H200 Tensor core GPU, which is the first GPU with HBM3e. H200 powers GenAI and high-performance computing workloads and is currently powering cloud instances from Amazon Web Services, CoreWeave and Microsoft Azure. NVIDIA AI Enterprise, which includes NVIDIA NeMo and NIM microservices, is gaining traction as enterprises are using it to develop Co-Pilots and agents.
NVIDIA’s expanding footprint across different domains is a key catalyst. It announced the NVIDIA AI Blueprint for retail shopping assistants, a Gen AI reference workflow designed to transform shopping experiences online and in stores. NVDA is pioneering advanced healthcare services with agentic and Gen AI technologies through IQVIA, Illumina, Mayo Clinic and Arc Institute.
Broadcom is benefiting from strong demand for networking products and custom AI accelerators (XPUs), which are necessary to train GenAI models. XPUs require complex integration of compute, memory, and I/O capabilities to achieve the necessary performance at lower power consumption and cost. Broadcom strengthened its AI portfolio with the launch of the industry’s first Face-to-Face (F2F) 3.5D XPUs.
AVGO’s innovative portfolio is a key catalyst. Its next-generation 3-nanometer XPUs are the first of its kind to market in that process node. This Zacks Rank #2 company is on track for volume shipment at hyperscale customers in the second half of fiscal 2025. (Read More: Broadcom Rides on Strong Demand for XPUs: Time to Buy the Stock?)
For the first quarter of fiscal 2025, AVGO expects the momentum in AI connectivity to remain strong as more hyperscalers deploy Jericho3-AI in their fabrics. Broadcom expects first-quarter fiscal 2025 AI revenues to grow 65% year over year to $3.8 billion.
AVGO sees massive opportunities in the AI space as specific hyperscalers have started developing their own XPUs. It believes that by 2027, each of AVGO’s three hyperscalers plans to deploy 1 million XPU clusters across a single fabric. Serviceable Addressable Market for XPUs and network are expected between $60 billion and $90 billion in fiscal 2027 alone.
Another Zacks Rank #2 company, Palantir, deployed its Artificial Intelligence Platform (AIP) in 2023 for clientele across commercial and government sectors. AIP, which leverages ML technologies and Gen AI models, help customers in decision making by linking their disparate data and operations. (Read More: Is It Too Late to Buy Palantir Stock Post Blockbuster Quarter?)
Palantir’s expanding footprint in the U.S. federal domain through partners like Microsoft and Oracle has been a key catalyst. It collaborated with Oracle to offer secure cloud and AI solutions aiming to power businesses and governments globally. Palantir is deploying its suite of products — Foundry, Gotham, Apollo and AIP — in Microsoft Azure Government and in the Azure Government Secret (DoD Impact Level 6) and Top-Secret clouds.
PLTR has been working with the Department of Defense Chief Digital and Artificial Intelligence Office to make its AI-enabled operating system available across the Department of Defense. Palantir expanded Maven Smart System access across the military services to include the Army, Air Force, Space Force, Navy, and U.S. Marine Corps through a contract awarded by the DEVCOM Army Research Laboratory.
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