The artificial intelligence investment trend is evolving, prompting investors seeking innovative exposure to acquire technology "pick-and-shovel" stocks as major cloud service providers commit billions to constructing new data centers.
Data storage firms led the S&P 500 Index in 2025, with Sandisk shares skyrocketing nearly 580% to become the benchmark's top performer, followed by Western Digital Corp. in second place and Seagate Technology Holdings Plc in fourth. Concurrently, AI-related power providers and cable and fiber manufacturers such as Amphenol, Corning, NRG Energy., and GE Vernova all ranked within the Top 25.
This represents a shift from recent years, when Nvidia Corp.—the original AI pick-and-shovel enterprise—was firmly entrenched among the S&P 500's leading stocks. The chip behemoth advanced 40% in 2025, placing it as the 71st best performer in the index this year. While Nvidia and cloud hyperscalers Microsoft, Meta Platforms, and Alphabet continue to drive the market due to their immense scale, their percentage gains have begun to moderate.
“When market benchmarks are highly concentrated, identifying themes that will propel sales and earnings growth becomes crucial,” stated Jake Seltz, a portfolio manager at Allspring Global Investments. “AI currently stands as one of those dominant themes, which is not novel. Therefore, we are broadening our horizons beyond core technology sectors.”
Investors can uncover growth potential and more attractive valuations by investing in the next wave of companies poised to benefit from the billions hyperscalers are allocating to data center construction.
“Our focus is on the picks and shovels—the areas where that capital is actually being deployed,” explained Matt Sallee, a portfolio manager at Tortoise Capital Advisors, which holds no shares in any hyperscalers. “This includes chips to some extent, but more significantly, some lesser-known names.”
Naturally, some concerns on Wall Street suggest this spending could decelerate, potentially reversing gains in AI-linked stocks. This scenario echoes the pandemic period when demand for basic home health products surged.
“COVID-19 struck, and suddenly the world required far more face masks, hand sanitizer, and similar items,” recalled Jed Ellerbroek, portfolio manager at Argent Capital Management. However, within six to twelve months, a glut emerged, and “those supplying businesses transitioned from their peak performance to their most challenging times ever.”
Despite this, investor optimism for the AI trade persists as hyperscalers continue to pledge substantial expenditures. Here are the sectors investors are currently targeting to capitalize on the tech infrastructure expansion.
Data Storage
Wall Street anticipates data storage will remain a hot sector in 2026, following the significant surges of Sandisk, Western Digital, and Seagate in 2025. However, the boom for this year's top performers may be nearing its end. For instance, the average analyst price target for Sandisk in 2026 is $264, representing only an approximate 8% gain from its current level around $244.
Analysts foresee considerably greater upside for companies like Pure Storage, which trades at $68 but is projected to reach $94 in 2026—a 38% leap. Other digital storage stocks linked to AI include NetApp Inc. and Dell
Construction and Power
A variety of stocks associated with constructing and powering data centers are expected to maintain their momentum. Quanta Services Inc., which provides specialized contracting for utilities and telecommunications firms, is a top selection for Tortoise Capital’s Sallee. Other contractors include MYR Group., Primoris Services Corp., and MasTec.
Companies involved in wiring are also gaining popularity. These include Amphenol, which designs and manufactures high-speed fiber and copper interconnect solutions for data centers, and Emcor Group Inc., which handles mechanical and electrical construction. Additional power infrastructure names comprise Vistra, Constellation Energy., GE Vernova, and Generac, a manufacturer of backup generators.
Bitcoin Miners
Bitcoin miners represent a potential "total revaluation story" as they pivot from cryptocurrency mining towards powering data centers, according to Sallee.
“They already possess the electrical infrastructure, which they have utilized for over five years to produce Bitcoin,” he said. “They intend to redirect that electricity to higher-value, long-term contracts for high-performance computing hosting.”
Notable companies in this arena include Bitdeer Technologies Group, whose shares surged in October after announcing deeper moves into AI. Shares of IREN Ltd., Cipher Mining Inc., Riot Platforms Inc., and WhiteFiber Inc. have also received a boost from their plans to convert to high-performance computing data centers.
Heating and Cooling
Data centers require specialized, precision-controlled heating, ventilation, and air conditioning systems, generating demand for their manufacturers. Vertiv Holdings Co., a provider of power systems and cooling solutions for data centers, has climbed 46% in 2025 and remains a stock to monitor. Eaton Corp., another power management company, overlaps with Vertiv but is considered a less pure play, according to Seltz.
Other players in this space include Comfort Systems USA, which provides HVAC installation and maintenance, as well as water providers Xylem, Ecolab, and American Water Works Co.
Software
Some investors with longer-term horizons are turning to software as future beneficiaries of AI, anticipating improvements in large language models and the development of more applications.
“Investors are naturally inclined to seek companies with cheaper valuations and significant growth potential that are likely to benefit substantially from the application of AI,” remarked Melissa Otto, head of technology, media, and telecommunications research at Visible Alpha.
Software stocks have generally underperformed this year, with the S&P 500 Software Industry Index rising 12% in 2025 compared to a 17% gain for the overall benchmark. Nevertheless, this has rendered their valuations more appealing.
“I don't believe those narratives are exhausted,” said Allspring’s Seltz, who is monitoring names like Snowflake, Datadog, and ServiceNow. “It might feel slightly premature, but the stocks do appear attractive.”
