As central banks hold policy tight, Norges Bank has kept rates at 4.25% because inflation is still not at target. Higher borrowing costs can pressure some growth stories, yet they also reward companies that already convert sales into solid cash flow. That is where AI infrastructure stocks come in. This article walks through three picks from our AI Infrastructure Stocks screener that fit that profile.

The three stocks highlighted below are just a sample of this theme, with the full screen surfacing 52 more AI infrastructure companies that carry similarly compelling cash flow and growth narratives beyond what this article covers. To see the broader opportunity set and quickly identify which setups fit your own conviction level, head straight into the AI Infrastructure Stocks screener.

Western Digital (WDC)

Western Digital is a long established US data storage company that supplies hard disk drives and related systems for PCs, external storage and, increasingly, cloud and data center customers. The business currently generates around US$12.9b of revenue from hard disk drives, and the company has a market value of roughly US$156.5b.

Western Digital sits in the flow of AI infrastructure spending, with a focused hard drive business, long term data center contracts stretching into the next decade and gross margins around 50%. The stock is priced below some cash flow based estimates of value, yet current profitability is affected by one off gains and very high margins that may change once supply catches up. The company also makes heavy use of external funding and has seen recent insider selling, which may warrant close scrutiny. For investors willing to weigh that trade off, Western Digital provides a concentrated way to gain exposure to AI storage demand alongside current cash generation.

Western Digital’s cash rich AI storage story can look straightforward, yet the mix of high margins, one off gains and leverage raises harder questions on sustainability. For more detail, see the 4 key rewards and 3 important warning signs (1 is major!)

Build your own AI cash flow shortlist

Western Digital and the other two AI infrastructure stocks here all came from a single screener, but the real edge comes when you set your own rules. Use our flexible Screener to combine filters like cash flow, valuation, balance sheet strength and risks, or jump straight into our curated Investing Ideas for ready made shortlists.

Celestica (TSX:CLS)

Celestica is a Toronto based manufacturing and supply chain specialist that designs and builds complex hardware for hyperscalers, cloud providers and industrial customers, from AI racks and networking gear through to aerospace and health technology equipment. The business currently generates about US$3.3b in revenue from its Advanced Technology Solutions segment and roughly US$12.3b from Connectivity & Cloud Solutions, and the company has a market value of around CA$54.3b.

Investors who want exposure to AI infrastructure without owning chip designers directly may find Celestica interesting because its core CCS business is tied to hyperscaler demand for advanced networking and rack scale AI platforms like the Helios system with AMD. Earnings and revenue are growing quickly, margins are improving and analysts are lifting targets. At the same time, the recent CA$3b equity raise, heavy dependence on a handful of cloud customers and meaningful share price volatility keep the risk side of the story very real and worth understanding in more detail.

Celestica’s accelerating AI rack and networking story can look like pure momentum, yet that CA$3b raise and hyperscaler reliance keep the plot twist hidden in the 4 key rewards and 2 important warning signs (1 is major!)

Vertiv Holdings Co (VRT)

Vertiv Holdings Co keeps AI data centers running by supplying critical power systems, liquid and air cooled thermal management, racks, and life cycle services that support everything from online banking to large language models. The company generated about $7.5b of revenue from the Americas, $2.7b from Asia Pacific and $2.4b from Europe, the Middle East and Africa, with around $1.2b of intersegment sales offsetting that total. Vertiv currently carries a market value of roughly $111b.

Vertiv sits at the heart of the AI build out because every higher density data center needs exactly what it sells, from 800V DC power architectures to liquid cooling systems that can cut water usage. Earnings and revenue are forecast to grow strongly, supported by a roughly $15b backlog and expanding partnerships with chipmakers. However, the stock already trades on a rich P/E and relies heavily on a small group of hyperscaler customers. For investors who can handle valuation risk and volatility, Vertiv offers a focused way to tap into AI infrastructure growth while leaving plenty more to unpack beneath the headlines.

Vertiv’s accelerating AI data center story looks powerful, yet that rich P/E and heavy hyperscaler exposure leave a crucial question hanging. Get the full context in the analysis report for Vertiv Holdings Co

Curious To Explore High Potential Alternatives

Fresh stock ideas can build momentum fast and breakout before most investors even notice. Do not get caught chasing moves after they are flying. Act now and get in early.

• Spot cash rich small caps that still fly under the radar by scanning the curated 18 high quality undiscovered gems before the crowd starts paying attention.
• Lock in potential income streams while yields remain elevated by reviewing a hand picked group of 11 dividend fortresses before payout stories get fully priced.
• Ride long term infrastructure demand by tracking a focused mix of 35 power grid technology and infrastructure stocks chosen for balance sheet strength and real world grid exposure.

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.