Global bond markets are adjusting to higher long term yields as governments fund heavy investment, including AI related infrastructure. That puts a spotlight on companies supplying the hardware, power and cooling that AI models depend on. Investors who wait risk watching cash flows grow elsewhere. This article highlights three stocks from our AI Infrastructure Stocks screener that convert AI demand into real world revenue and capital.

The three stocks below are just a sample, and the full screen surfaced 53 more AI infrastructure companies with equally compelling narratives that are not covered in this article. To identify and analyze those additional opportunities, head straight into the AI Infrastructure Stocks screener.

Forgent Power Solutions (FPS)

Forgent Power Solutions designs and manufactures the electrical distribution hardware that keeps data centers, power grids and heavy industry running, with a clear AI angle through products such as PDUs, automatic transfer switches, paralleling switchgear, power skids and UPS eHouses that support high density AI computing loads. The company generates about US$1.2b of revenue from a single integrated products and services segment, primarily in North America, so AI focused data center gear sits within a broader utility and industrial customer base rather than dominating it. Forgent Power Solutions is valued at roughly US$11.8b, which puts it firmly in mid cap territory for investors tracking the build out of AI infrastructure.

Investors watching the shift from AI hype to physical build out may want to pay attention to Forgent Power Solutions because its data center power equipment is directly tied to how many AI racks can actually be switched on. Record bookings and a large backlog linked to AI data centers and grid upgrades provide visibility into multi year projects, while analysts currently forecast earnings growth and improving returns as new facilities ramp. At the same time, thin net margins, heavy use of external borrowing and a relatively new leadership team mean execution and funding risks are real. If management can convert the current AI related order book into durable cash generation, Forgent Power Solutions may be viewed as one of the more focused power suppliers to this theme.

Forgent Power Solutions is already wired into AI data center buildouts, yet the full story lies in how those contracts translate into cash, balance sheet strength, and execution risk inside the 4 key rewards and 2 important warning signs (1 is major!)

Build your own AI infrastructure shortlist

Forgent Power Solutions and the other stocks in this article all surfaced through a single screener, but your edge comes from tailoring the filters to what matters most to you. Use our flexible Screener to mix criteria like valuation, growth and balance sheet strength, or jump straight into our curated Investing Ideas for ready made starting points.

Lumentum Holdings (LITE)

Lumentum Holdings is a photonics manufacturer that supplies the optical modules and high speed laser components hyperscale data centers use to move AI workloads across fiber, as well as products for telecom, consumer and industrial customers. Its AI link is most direct in those data center interconnect modules and photonic chips that provide high bandwidth, low latency connectivity between GPU clusters. Lumentum Holdings has a market cap of about US$85.8b.

Investors looking at the physical layer of AI may consider Lumentum Holdings because its optical modules and lasers are central to replacing copper links with fiber in dense GPU data centers. Recent earnings updates from the company describe demand for 800G and 1.6T transceivers. The company has reported improving margins and cash flow as factory utilization rises, yet carries significant debt and has relied on external funding, so any slowdown in hyperscale spending or supply chain setbacks could have a meaningful impact. The valuation already reflects high expectations for AI related growth, which makes the combination of potential demand drivers and execution and balance sheet risks a story that some investors may want to examine more closely.

Accelerating AI interconnect demand is only half the story for Lumentum Holdings. The real question is how that plays through its balance sheet, margins and debt profile inside the 3 key rewards and 3 important warning signs

Vertiv Holdings Co (VRT)

Vertiv Holdings Co is a US$112.6b critical infrastructure supplier for data centers and communications networks, best known in the AI context for high density thermal management and liquid cooling systems that allow GPU heavy racks to run safely at scale. While it also sells broader power and service offerings, a large part of its relevance to AI comes from these cooling and rack power products that sit inside new and upgraded data centers. Vertiv generated about US$7.5b of revenue in the Americas, US$2.7b in Asia Pacific and US$2.4b in Europe, the Middle East and Africa, with some intersegment adjustments between regions.

Vertiv puts you directly in the plumbing of the AI build out, with liquid cooling and power systems that many hyperscale data centers now view as essential rather than optional. Strong profitability metrics and high returns on equity suggest the company is currently turning this demand into solid cash generation. However, the stock trades on a premium valuation that leaves little room for disappointment if AI related capex slows or competitors gain ground. For investors comfortable with that trade off, the mix of theme exposure, improving margins and a growing services layer may warrant a closer look at how the story is evolving beneath the headlines.

Vertiv’s AI cooling and power story is accelerating, yet the real surprise may sit in how its cash generation, returns and valuation stack up against peers inside the analysis report for Vertiv Holdings Co

Seeking Fresh Alternatives Before Others Catch On

New stock stories keep breaking while older ideas lose momentum. Before the best entry points are caught by the crowd, scan curated opportunities that are still under the radar for now and consider acting early.

• Spot potential turnaround stories early by reviewing the curated 50 high quality undervalued stocks that may appeal if you want earnings, cash flows and balance sheets to matter while it still counts.
• Follow structural demand shifts by scanning the hand picked 93 nuclear energy infrastructure stocks that focus on energy infrastructure at a time when power needs are changing and capital is still finding its footing.
• Monitor long term income potential by assessing the curated 11 dividend fortresses before yields change or valuations move away from ranges that long term dividend investors often prefer.

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.