When the AI gold rush turns to "selling shovels": Wall Street seeks the next wave of undervalued areas, with a focus on storage and energy.

As major cloud service providers invest billions of dollars in new data centers, the investment landscape for artificial intelligence is changing, with investors seeking innovative ways to invest flocking to technology companies in search of potential growth. In 2025, data storage companies dominated the performance of the S&P 500 index. Sandisk Corp. (SNDK.US) saw its stock price skyrocket nearly 580%, making it the best-performing component stock in the benchmark index, with Western Digital Corporation (WDC.US) coming in second and Seagate Technology Holdings PLC (STX.US) ranking fourth. Additionally, AI-related power suppliers, cable and fiber optic manufacturers such as Amphenol Corporation (APH.US), Corning Inc. (GLW.US), NRG Energy (NRG.US), and GE Vernova (GEV.US) also made it to the top 25. This is a departure from the past few years when the original AI "shovel-sellers" company NVIDIA Corporation consistently ranked among the top stocks in the S&P 500 index. The chip giant saw a 40% increase in its stock price in 2025, making it the 71st best-performing component stock in the index this year. While NVIDIA Corporation and cloud hyperscalers Microsoft Corporation (MSFT.US), Meta Platforms (META.US), and Alphabet (GOOGL.US) continue to drive the market due to their massive scale, their percentage gains have started to diminish. "As the market benchmark index components become relatively concentrated, it is very important to look for themes that drive sales and profit growth," said Jack Seltz, portfolio manager at Allspring Global Investments. "AI is one of the dominant themes now, and this is not new. Therefore, we are broadening our scope and looking beyond technology." Multiple companies are benefitting from the billions of dollars being spent by hyperscalers to build data centers, and investors may find growth potential and better valuations by buying into these dark horses. "We are focusing on the 'shovels and picks' of where the money is being spent," said Tortoise Capital Advisors portfolio manager Matt Sali, whose company does not hold any shares of hyperscale companies. "It's somewhat chips, but more of names you've never really heard of before." Nevertheless, there are concerns on Wall Street that spending may slow down, potentially reversing the gains of AI-related stocks. This is similar to what happened during the pandemic, when there was a surge in demand for basic household health products. "The pandemic hit, and the world needed more masks, hand sanitizers, and all of those things," said Jedd Ellebrock, portfolio manager at Argent Capital Management. But within six to twelve months, there was an oversupply, "and the companies supplying those products went from having the best times in history to absolute worst times." Despite this, as hyperscalers continue to commit to investment, investors remain optimistic about AI investments. The following are the targets that investors are currently buying into for participating in the construction of technology infrastructure. Data Storage After the surge of Sandisk, Western Digital Corporation, and Seagate in 2025, Wall Street expects data storage to continue to be hot in 2026. However, the boom period this year for these winners may be coming to an end. For example, analysts have an average target price for Sandisk in 2026 of $264, which is about 8% higher than its current price of around $244. Analysts believe companies like Pure Storage Inc. have more room for growth, with the company currently trading around $68 but expected to reach $94 by 2026, a 38% increase. Other AI-related digital storage stocks include NetApp and Dell Technologies, Inc. Class C (DELL.US). Construction and Power A range of stocks related to data center construction and power supply is expected to continue to rise. Quanta Services Inc., which provides professional contracting services for utilities and telecom companies, is the top pick for Tortoise Capital analyst Sali. Other contractors include MYR Group Inc., Primoris Services Corp., and MasTec Inc. Companies involved in cabling business are also favored. These include Amphenol Corporation, which designs and manufactures high-speed fiber optic and copper interconnect solutions for data centers, and Emcor Group Inc., which engages in mechanical and electrical construction. Other companies in the power infrastructure sector include Vistra Corp. (VST.US), Constellation Energy Corp. (CEG.US), GE Vernova, and Generac Holdings Inc., which manufactures backup generators. Bitcoin Miners According to Sali, bitcoin miners represent a potential "overall revaluation story" as they transition from mining cryptocurrency to supplying power to data centers. "They already have the power, and they've been using it to produce bitcoin for over five years," he said. "They will redirect that power towards higher-value, long-term high-performance computing hosting contracts." Companies in this sector include Bitdeer Technologies Group, which saw a jump in its stock price in October after announcing plans to further enter AI. The stock prices of IREN Ltd. (IREN.US), Cipher Mining Inc. (CIFR.US), Riot Platforms Inc. (RIOT.US), and WhiteFiber Inc. (WYFI.US) have also been boosted as the companies intend to shift towards high-performance computing data centers. Heating and Cooling Data centers require specialized precision control heating, ventilation, and air conditioning (HVAC) systems, creating demand for companies that manufacture these systems. Vertiv Holdings Co. (VRT.US), which provides power systems and cooling solutions for data centers, saw a 46% increase in its stock price in 2025 and remains a stock worth watching. According to Seltz, another power management company, Eaton Corp. Plc, has overlapping business with Vertiv but lower purity. Other companies in this sector include Comfort Systems USA Inc., which provides HVAC system installation and maintenance for data centers, as well as water companies Xylem Inc., Ecolab Inc., and American Water Works Company. Software As language models improve and more applications are developed, some investors with longer investment horizons are looking at software as potential beneficiaries of AI in the future. "I think investors naturally gravitate towards companies that are cheaper in valuation, have enormous growth potential, and could really benefit from AI applications," said Melissa Otto, Director of Technology, Media, and Telecommunications Research at Visible Alpha. Software stocks have generally performed poorly this year, with the S&P 500 software industry index rising 12% in 2025, compared to the overall benchmark index's 17% increase. However, this has made the valuations of these stocks more attractive. "I don't think those stories are over," said Seltz of Allspring, who is keeping an eye on companies like Snowflake Inc. (SNOW.US), Datadog Inc. (DDOG.US), and ServiceNow Inc. (NOW.US). "It may feel a bit early, but these stocks do look attractive."