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AI stocks rallied last week after Openai announced the partnership with Oracle (Orcl) and SoftBank that could result in up to half a trillion dollars of investment in AI infrastructure over the next four years.
The investment announced on Tuesday adds to the huge sums the tech giants have already said they will spend on data centers and other AI infrastructure in the coming years. Microsoft (MSFT) President Brad Smith said earlier this month that the company is “on track to invest about $80 billion to build out AI-enabled data” in the fiscal year ending in June. Alphabet contestants (Goog) (Google), Amazon (Amzn) and meta platforms (Target) forecast investments on a similar scale.
That spending has fueled a huge rally in the stocks of companies that supply the metaphorical “picks and shovels” of artificial intelligence: makers of semiconductors, servers and network equipment, as well as power generators.
Below, we take a look at the weekly performance of Wall Street’s favorite AI plays and dive deeper into some of the best AI stocks.
Shares of Ciena Corp.Price), which sells network hardware, software and services to telecommunications and cloud computing customers, rose 14% last week. Ciena is expected to benefit from the widespread adoption of artificial intelligence applications, which should boost demand for its optical networking technology.
“As demand for Cloud bandwidth and AI across the network, we are positioned for accelerated revenue growth and market share expansion moving forward,” CEO Gary Smith said in the company’s latest earnings report.
Bank of America analyst Tal Liani predicted earlier this month that Ciena would be a key user of Genaj this year. The company, he estimated, commands nearly 30% of the optical market share (excluding China) and nearly 50% of the 800g optical market. Liani expects 800g modules, which provide the highest throughput of any optical module available, “to become increasingly prominent in 2025 and beyond to support high bandwidth and low latency requirements.”
Liani is one of eight Wall Street analysts who followed Visible Alpha, which calls Ciena Stock a “buy.” One analyst assigned it a “hold” rating. The $91.56 average target is 5% below Friday’s close.
Arista Networks (Anet), Ciena’s competitor in the networking space, also rose last week, up 7.7%.
Shares of monolithic power systems (MPWWR) jumped 8.4% last week.
The company, which designs and sells power management semiconductors for a range of markets, has seen its sales bubble with growing demand for AI. In Q3 2024, Monolith reported an 86% increase in AI and cloud computing revenue. That business accounted for roughly 30% of total sales, up from 21% in the third quarter of 2023 and just 10% in 2021.
