With US composite PMI now at its strongest level since April 2022, the services side of the economy is doing the heavy lifting again. That demands more data, more processing power and more reliable infrastructure underneath it all. For investors, AI infrastructure stocks offer exposure to that physical backbone where demand ties directly to usage. This article walks through 3 AI Infrastructure Stocks screener picks that may merit a closer look.

The 3 stocks in this article are just a starting sample, with the full AI infrastructure screen surfacing 51 more companies with equally compelling narratives that are not covered here. To explore this theme in more detail, analyze and compare the full opportunity set inside the AI Infrastructure Stocks screener.

Western Digital (WDC)

Overview: Western Digital is a long-established data storage company that develops and sells hard disk drives and related platforms, with its high-capacity data center HDDs and enterprise storage systems playing a central role in housing the vast datasets that AI training and inference workloads rely on. Alongside consumer and small office products, Western Digital supplies hyperscale and cloud customers that need dense, cost efficient storage to keep AI data flowing.

Operations: Western Digital generates all of its approximately US$12.9b in revenue from Hard Disk Drives, selling into markets worldwide including the United States at about US$5.2b, China at about US$2.5b, and Europe, the Middle East and Africa at about US$2.1b.

Market Cap: US$165.6b

Western Digital may appeal to investors seeking direct exposure to the physical storage layer of AI, where enterprise HDDs and storage platforms are tied to hyperscale contracts rather than consumer gadget cycles. The company is closely linked to data center customers that need high capacity drives for AI datasets, and recent commentary points to long term supply agreements that support visibility on demand and pricing. At the same time, very strong margins and earnings leave limited room for complacency if capacity expands too quickly, if AI capex cools, or if alternative storage technologies begin to pressure the high capacity tier. That combination of AI related demand, concentrated industry structure and cycle risk is a key consideration for anyone evaluating Western Digital.

Western Digital’s AI story hinges on dense storage tied to hyperscale contracts; yet very strong margins and earnings can sometimes mask key pressure points. Get the full picture in the 4 key rewards and 3 important warning signs (1 is major!)

Lumentum Holdings (LITE)

Overview: Lumentum Holdings supplies the high speed optical modules and photonic components that link hyperscale AI and cloud data centers over fiber, with products such as optical transceivers, wavelength management systems, and optical circuit switches forming a key part of the networking fabric between AI/ML clusters and storage. Alongside this data center and telecom exposure, the company also sells lasers and photonic devices into consumer and industrial applications, so AI infrastructure is a major growth driver but not its only end market.

Operations: Lumentum generates all of its approximately US$3.0b in revenue from its Integrated Enterprise segment, selling into customers across the United States at about US$627.9 million, Thailand at about US$626.6 million, Hong Kong at about US$519.3 million, Mexico at about US$443.7 million, China at about US$284.8 million, and other international markets.

Market Cap: US$77.7b

Lumentum Holdings is worth a closer look if you want exposure to the physical fiber links that keep AI data centers talking to each other, with record cloud transceiver shipments, 1.6T products ramping and recent gross margins above 50% pointing to strong demand for its optics. At the same time, the stock carries a high P/S multiple, relies on a leveraged funding structure and remains in loss making territory. A lot therefore depends on the forecast swing to profitability and healthier free cash flow. For investors, the real question is whether AI driven orders and margin strength can prove durable enough to offset customer concentration, dilution risk and insider selling, and fully justify today’s optimism around Lumentum.

Record cloud transceiver shipments and high gross margins suggest Lumentum’s loss making phase might not tell the whole story. See how the analyst forecasts for Lumentum Holdings stack up against customer concentration and funding risks that could flip the script.

Vertiv Holdings Co (VRT)

Overview: Vertiv Holdings Co supplies the power systems, high density cooling and thermal management hardware that keep data centers and AI compute racks running, with a particular focus on liquid cooled solutions that handle the intense heat of modern GPU clusters. Alongside these AI ready products, Vertiv also provides lifecycle services, remote monitoring and broader infrastructure support for communication networks and industrial environments.

Operations: Vertiv generates most of its roughly US$10.2b in revenue from the Americas at about US$7.5b, with additional contributions from the Asia Pacific region at about US$2.7b and Europe, the Middle East and Africa at about US$2.4b, partly offset by intersegment sales of about US$1.2b.

Market Cap: US$100.8b

Vertiv may appeal to investors seeking exposure to the physical build out of AI, where liquid cooling, uninterruptible power and modular data center gear are mandatory rather than optional for hyperscalers. The company is already converting this demand into sizeable revenue and earnings growth, supported by high density thermal systems that are directly tied to GPU rack deployments. At the same time, the stock trades at a premium valuation and depends heavily on a small group of large cloud customers, so any slowdown in AI capital expenditure or competitive pressure on cooling and power margins could have a meaningful impact. For investors willing to accept that trade off, Vertiv offers one way to link AI infrastructure demand to a business with increasing cash generation and a substantial order backlog that still leaves plenty to unpack.

Vertiv’s AI build out story is racing ahead while a premium price tag raises fresh questions. See how the analyst forecasts for Vertiv Holdings Co line up with concentration risk and what that might mean for the next leg of this thesis.

Seeking Alternatives Before The Crowd Moves

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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.