3 Digital Infrastructure Stocks Riding The AI Buildout

AI headlines, record highs in Apple, a sharp 18% move in Meta, and choppy oil prices are pulling attention back to the digital backbone that keeps all this running. Instead of chasing every spike, it can help to focus on large, established companies tied to cloud services and digital infrastructure that are directly exposed to these news trends. This article looks at 3 stocks from our Digital Infrastructure and Cloud Services screener that appear connected to the latest AI and cloud catalysts, and breaks down what that could mean for risk, potential reward, and portfolio fit.

Calix (CALX)

Overview: Calix is a US based cloud and software company that helps broadband service providers run smarter networks and offer managed Wi-Fi, security, and connectivity services for homes, businesses, and entire communities.

Operations: Calix generates about US$1.06b in revenue primarily from developing, marketing, and selling communications access systems and software, with roughly US$989m coming from the United States and the rest from Europe, the Americas outside the US, and other international markets.

Market Cap: US$2.53b

Calix sits at the intersection of AI, cloud, and broadband, giving you exposure to the digital infrastructure that supports rising data and connectivity needs while AI heavyweights such as Apple and Meta receive most of the attention. Its platforms are being used by providers that report higher ARPU, strong Net Promoter Scores, and adoption of SmartBiz and SmartMDU services, indicating traction in real customer outcomes. At the same time, the company carries funding risk from reliance on external borrowing and faces rising competition and execution risk as it builds out AI driven features. For investors, an important consideration is how these growth drivers, funding choices, and AI investments may influence Calix’s earnings power over the coming years.

Calix sits at the intersection of rising ARPU stories and real funding questions, and the gap between those two is what matters most for long term returns. Get the full picture in the DCF valuation analysis for Calix

Technology One (ASX:TNE)

Overview: Technology One is an Australia based enterprise software company that provides cloud based ERP and related applications to local governments, universities, public sector agencies, health providers and corporates. It helps these organisations run finance, HR, asset management, student services and other core operations on a single integrated platform.

Operations: Technology One generates about A$631.2m in revenue, with A$435.5m from Software, A$98.0m from Consulting, and A$97.8m from Corporate activities.

Market Cap: A$10.05b

Technology One is tightly linked to the AI and cloud theme that is lifting sentiment for Apple and Meta, but it is doing this in a quieter corner of the market by powering the back office of councils, universities and service providers. The company reports high quality earnings, strong ROE around 33%, solid recurring SaaS revenue and regular dividends. Many investors view this as a way to balance AI-related interest with cash flow and income. The flip side is a very rich P/E, net margins that have softened from 24.1% to 22.4%, funding that leans on external borrowing, and recent insider selling. These factors could make some investors cautious about paying a premium without understanding the full risk reward trade off.

Technology One’s rich P/E, high ROE and recurring SaaS income suggest a story that could be more than just a quality premium, and the full risk reward picture may surprise you in the 2 key rewards and 1 important warning sign

Flex (FLEX)

Overview: Flex is a global manufacturing and supply chain partner that designs and builds hardware for data centers, communications, automotive, healthcare, industrial and consumer products, helping major brands turn complex electronic and power intensive systems into finished devices at scale.

Operations: Flex generates about US$27.9b in revenue, with around US$11.1b from Integrated Technology Solutions, US$10.2b from Regulated Manufacturing Solutions and US$6.6b from Cloud and Power Infrastructure, supported by a geographically diverse base led by Mexico, the United States and China.

Market Cap: US$51.27b

Flex sits at the heart of the AI hardware build out, supplying cloud and power infrastructure for dense data centers while also serving automotive, healthcare and industrial customers, which helps broaden its revenue base. Its involvement in AI accelerators, new high power data center products and S&P 500 inclusion have put it squarely in the conversation around the next phase of AI growth, and analysts expect strong earnings expansion. At the same time, thin net margins, reliance on external borrowing, customer concentration and recent insider selling mean the stock is not without risk. For investors, the key question is whether Flex’s role in AI infrastructure and higher margin verticals justifies accepting those funding and execution trade offs.

Flex’s accelerating role in AI hardware, thin margins and customer concentration hint at a story investors may be misreading, and the real twist sits inside the 3 key rewards and 2 important warning signs

The three stocks covered here are only a starting point, and the full Digital Infrastructure and Cloud Services screener uncovers 33 more companies in digital infrastructure and cloud services with equally compelling narratives that you have not seen yet. Use Simply Wall St to identify, analyze, and filter for the specific catalysts and storylines that matter to you so you can focus on the highest conviction opportunities in this theme.

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If Flex or any of these companies sound like a great opportunity, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value the ideal entry point. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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