3 AI Infrastructure Stocks Backed By Data Center Spending

Artificial intelligence is attracting huge amounts of capital, with AI linked firms now tied to an estimated $27 trillion of market value and tech giants taking on more debt to fund chips, hardware, and data centers. That mix of enthusiasm, leverage, and warnings about a possible bubble can create both opportunity and risk for investors looking at AI exposed stocks. This article walks through 3 large, financially screened companies connected to AI and related hardware that are currently positioned to benefit from the recent AI spending surge, helping you decide whether any of these stocks deserve a closer look in your own research.

Coherent (COHR)

Overview: Coherent is a US-based manufacturer of advanced materials, optical components, and laser systems that sit at the heart of AI data centers, communications networks, and high-end electronics manufacturing worldwide.

Operations: Coherent reports a Segment Adjustment revenue line of US$6.6b, with geographic revenue concentrated in North America at about US$4.2b, followed by Europe (US$788.6m), China (US$737.3m), Japan (US$405.1m), and the Rest of World (US$475.1m).

Market Cap: US$54.3b

Investors looking at AI infrastructure may consider Coherent as a company to watch, as it supplies the optical and laser technology that AI data centers and high-performance chips rely on, supported by a multi year backlog, a partnership with NVIDIA, and CHIPS Act supported capacity expansion in Texas. That exposure comes with real trade offs, including a high P/E multiple, heavy reliance on external borrowing, one off losses, and sensitivity to demand from a handful of large tech customers. What those headline numbers do not show is how Coherent’s manufacturing choices, customer mix, and funding structure could shape the durability of that AI driven story over the next phase.

Coherent’s AI hardware exposure, multi year backlog, and NVIDIA partnership point to a bigger story that the headline P/E and leverage only hint at, so start with the 4 key rewards and 3 important warning signs

Extreme Networks (EXTR)

Overview: Extreme Networks provides cloud managed, AI powered networking equipment and software that help enterprises, governments, and service providers run wired and wireless networks across offices, campuses, stadiums, and data centers.

Operations: Extreme Networks generates about US$1.3b from developing and marketing network infrastructure equipment and related software, with revenue split across APAC (US$129.1m), EMEA (US$545.9m), the United States (US$529.3m), and Other Americas (US$47.7m).

Market Cap: US$4.0b

Extreme Networks stands out in the AI and networking theme because it sits at the intersection of AI driven network management, Wi Fi 7 upgrades, and large venue and enterprise connectivity, from NFL stadiums to universities. The company is already profitable, carries a high current ROE that is linked to leverage, and is expected by analysts to grow earnings quickly. Together, these factors make its current valuation and P/S multiple worth a closer look. At the same time, heavy reliance on big government and public sector contracts, high debt use, one off losses, and recent insider selling mean that execution on AI networking products and recurring revenue is critical to the story investors are considering.

Extreme Networks has earnings growth expectations, AI networking exposure, and a P/S multiple that many investors may not have fully connected yet. Review the analyst forecasts for Extreme Networks to see what could be driving the next chapter.

Fabrinet (FN)

Overview: Fabrinet is a contract manufacturer that builds high precision optical, electronic, and electro mechanical components used in high speed data networks, AI data centers, industrial lasers, automotive systems, and medical devices, acting as a behind the scenes partner for many large original equipment manufacturers.

Operations: Fabrinet generates about US$4.2b in revenue primarily from Optical Networking Equipments, supporting high speed connectivity and data traffic for telecom and AI data center customers.

Market Cap: US$17.1b

Fabrinet sits in the slipstream of AI spending, supplying the high speed optical transceivers and data center interconnect gear that rising AI workloads depend on. Analysts currently model a forecast ROE of about 24.3%. The investment case includes several points of tension, as the stock trades above some fair value estimates, relies heavily on a few big customers like NVIDIA and Cisco, and shows insider selling and a funding mix tied to external borrowing. For investors tracking AI infrastructure, the mix of recent earnings momentum, capacity expansion, and concentration risk makes Fabrinet a stock that some may wish to study in more depth before forming a view on whether current expectations are too cautious or already rich.

Fabrinet’s AI fueled order book and forecast 24.3% ROE suggest earnings power the market may not fully appreciate yet, while customer concentration and valuation questions hang over the story, so review the analyst forecasts for Fabrinet

The three AI exposed stocks in this article are just the starting point. The full Artificial Intelligence and Related Hardware Sector screen surfaces 28 more companies with equally compelling stories through the Artificial Intelligence (AI) and Related Hardware Sector screener. Use Simply Wall St to identify and analyze the exact catalysts, financial strength, and business narratives that matter most to you so you can focus on your highest conviction AI and hardware opportunities.

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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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