AI Infrastructure Profits Double the S&P 500 Growth Rate

Everywhere you look there’s talk of an AI bubble.

We don’t see it that way.

Our work suggests the crowd is grossly underestimating the transformative nature of this tech boom.

The fact is simple: AI infrastructure profits are double the S&P 500 growth rate.

Let’s face it. Artificial intelligence has sucked all the air out of the room.

…for good reason.

The opportunity is massive.

To prove this, we’ll unpack 3 data-rich studies underscoring:

• Massive investment from hyperscalers
• Why AI adopters are seeing profits surge
• And why AI infrastructure companies are the best bet right now

Even better, we created a 25-stock basket levered to AI infrastructure including huge themes like memory, optics, semiconductors, and power.

This is the trade of the year.

Hyperscaler Capex Will Surge 63% in 2026

As artificial intelligence scales, countries are racing to build the infrastructure needed to support it both now and in the future.

The U.S. is home to 43% of the world’s 9,493 data centers, by far the largest share globally, according to Visual Capitalist.

US hyper-scaler AI capex is expected to surge 63% to $677B in 2026 from $416B in 2025. J.P. Morgan forecasts a further ramp up to $761B in 2027 and $802B in 2028 (chart).

There’s lots of runway for overseas AI infrastructure growth too.

Germany, the UK and China still have only 507, 506 and 369, datacenters respectively.

Because AI applications require low latency, data centers are increasingly being built closer to end users - fueling significant worldwide capacity expansion.

All this AI spending has the crowd humming about a bubble.

Here’s reason #1 AI bubble fears are overblown:

We are in the early innings of this transformative technology.

Consider this, at peak buildouts of prior major tech revolutions:

• Railroad capex reached 6% of GDP in the 1880s
• Internet infrastructure hit 4% of GDP in the 1990s
• By contrast, AI investment today sits at just 2.1% of GDP (chart)

If history is a guide, the AI investment cycle still has room to run.

Expect the AI infrastructure build-out to remain a winning stock market theme.

AI Adoption Will Accelerate Because It’s Boosting Margins

Here’s reason #2 AI bubble fears are overblown: AI adopters have the best bottom lines.

On April 20, we told you Earnings Momentum is Accelerating and Will Send Stocks Surging.

Profit momentum is being driven by margin expansion at S&P 500 companies enabling and using AI.

AI adopters are enjoying 16.5% net profit margins, outpacing the 13% seen by companies not using AI (chart).

Here’s the best part. AI adoption is still in its infancy.

According to JP Morgan, only 19% of U.S. businesses report using AI.

Bubbles burst when demand fails to materialize. That’s the opposite of what’s happening with AI adoption.

As more companies integrate AI, productivity gains will become even more widespread, fueling further adoption, creating a virtuous cycle of AI infrastructure demand.

AI Infrastructure Profits Double the S&P 500 Growth Rate

Let’s tie it all together with reason #3 to fade the AI bubble fears narrative: AI infrastructure earnings growth is more than double the market’s.

Bubbles happen when profits don’t live up to the hype. That’s the opposite of what’s happening in the AI infrastructure space today.

The rapid spread of AI is fueling massive operating leverage as sales ramp for leading AI infrastructure plays.

MoneyFlows created an equally weighted 25 stock AI infrastructure basket spanning semis, power, optics networking and hyper-scalers.

Our AI infrastructure basket’s constituents’ earnings are forecasted to grow by an average of 39% next year, more than double the 16% consensus EPS growth forecast for the S&P 500 (chart).

Nothing drives stocks higher than the expectation of surging profits.

Those who embrace the core players in their portfolios stand to crush overall markets.

Here’s an actionable portfolio allocation.

What this Means for Your Portfolio

AI infrastructure has been a winning theme for months. After taking a back seat to energy in March, it’s back on top as energy cools amid gradually receding geopolitical risk.

The best way to play AI infrastructure is bottom-up with winning outliers vs. buying broad-based sectors.

Playing it at the sector level misses the AI infrastructure theme because many stocks in sectors are not part of the AI trade.

To win big, you must drill down on individual names.

Not to worry, MoneyFlows was built to find winners.

MoneyFlows was quick to the AI infrastructure trade as institutional investors often move EARLY.

That’s how you outperform!

Today’s stock list focuses on the previously mentioned MoneyFlows AI infrastructure basket of 25 outliers in semiconductors, hyper-scalers, power, optics, and networking.

Inflows have been constant, powering most of these names to one record high after another.

Under-the-surface of the market is a world of hidden opportunity.

To get access and make even more from this call to action, sign up for a PRO membership.

You’ll get our proprietary indicators and learn how our unique money flow approach finds outlier stocks early. Give it a shot!

If you’re a money manager or RIA and want portfolio solutions and deep ETF insights, reach out about our Advisor solution here.

Be early next time.

Go with the flows!

AI infrastructure has taken the leadership baton. This theme spans elite companies levered to the surging AI buildout.

Below is a sector-diversified list of 25 powerful winning stocks with big money activity.