Nvidia and eight other stocks. Which companies to bet on after the Microsoft report?

AI chip supplier Nvidia and eight other data center-related companies could benefit from strong quarterly reports from Microsoft and Meta, Barron's believes. Both companies continue to aggressively ramp up their investments in artificial intelligence, and as long as that continues to happen - AI-related stocks will feel good, the publication said. However, it also warned of risks: the rally may slow down, as many beneficiaries of the AI boom have already shown strong growth and good quarterly results.

Higher-than-expected growth in data center investment bodes well for revenue growth for all equipment vendors working with Microsoft, Meta and other tech giants, writes Barron's. Both Meta and Meta and Microsoft reported strong financial results this past quarter, but most importantly, they continue to ramp up investments in infrastructure and artificial intelligence, the publication adds.

In the second quarter of 2025, Meta spent $16.5 billion - more than double the result of a year ago, and raised its capex forecast for the whole 2025 to $66-72 billion. Microsoft also increased spending to $17.1 billion, and in the next quarter plans to invest a record $30 billion - 60% more than analysts' expectations. Microsoft CFO Amy Hood explained that this is due to sustained demand for Azure cloud services and their AI components. To cope with the load, both companies are actively building data centers, which directly supports the demand for equipment.

Barron's gathered shares of nine companies that can be considered beneficiaries of strong reports from Microsoft and Meta.

- AI chip supplier Nvidia. In trading on July 31, Nvidia's shares were up 2.2% to $183.3.  That was a new all-time high, but then the company's stock lost all of its gains and ended the day down 0.78%. Since the beginning of the year, Nvidia's market value has grown by 32%: it became the world's first publicly traded company with a capitalization above $4 trillion. After the strong report, it was temporarily joined by Microsoft.

- Shares of chipmaker AMD jumped by 1.6%, hitting a one-year intraday high. However, by the close of trading, they had squandered all the gains and ended up down 1.78%. Since the beginning of the year, AMD's market value has increased by 46%.

- Shares of another chipmaker, Broadcom, also initiallyrose to an intraday all-time high (up 1.4% to $306.95), but eventually fell 2.9%. Still, analysts at Citi believe that AMD and Broadcom will be the main beneficiaries of Microsoft and Meta's capex growth. Microsoft accounts for about 8% of AMD's revenue and Meta accounts for about 2% of Broadcom's revenue, the bank calculated.

- Shares of Vertiv Holdings, which supplies cooling and power supply equipment and gets most of its revenue from data center customers, were the strongest performers. The company shares were up nearly 6% to $152.6 in trading on July 31, though they have since slowed to 1%. Compared to 2025, Vertiv's market value is up 28%.

- Quotes of Eaton, which supplies equipment for data centers and receives almost half of its revenue from them, rose by 1.5%, but then also lost almost all the growth. Since the start of 2025, the company's securities are up nearly 16%.  

- Shares of Carrier Global, which makes HVAC systems for data centers, added 2% in trading and are up less than 1% YTD.

- Shares of Johnson Controls, where about 10% of sales are tied to data centers, jumped 1%. Compared to early 2025, the company's market value is now up by a third.

- Arista Networks, which makes network switches and routers, showed similar growth.

- Amphenol, which makes connectors for a variety of industries including data centers, grew at the moment by more than 2%.

As long as big players like Meta and Microsoft continue to participate in the AI race and aggressively increase their capex - the shares of infrastructure providers will also feel confident, Barron's writes.

Still, there are pitfalls. The growth rates of some stocks are starting to slow down after they have already added tens of percent over the year, with some of them almost doubling in price, the publication noted. In addition, many of the listed companies have already reported earnings for the second quarter and demonstrated faster-than-expected growth in the data center sector, Barron's stresses. Against this background, investors should not forget that the current rally is limited and cannot be eternal, he warned.

This article was AI-translated and verified by a human editor