Among the biggest market drivers over the past couple of years have been the developments in the artificial intelligence (AI) industry. In simplest terms, AI’s advanced algorithms can be deployed to streamline and automate many time-consuming tasks, freeing up people for higher-level work. As a result, many believe that generative AI will spark a wave of productivity growth, creating windfall profits for the companies that make the best use of this cutting-edge technology.
Earlier this week, President Donald Trump announced an initiative dubbed Project Stargate, which he said will be the “largest AI infrastructure project in history.” The private joint venture will initially be funded by SoftBank, OpenAI, Oracle, and AI-focused investment fund MGX, and “intends to invest $500 billion over the next four years building AI infrastructure,” according to the press release. The initiative plans to build as many as 20 immense data centers across the country designed to meet the processing power needs of AI systems.
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The announcement also revealed the identities of several companies that will be tapped to provide the necessary technology. Let’s look at three that stand to profit from this sizable infrastructure investment.
Image source: Getty Images.
1. Nvidia
It shouldn’t be any surprise that Nvidia (NASDAQ: NVDA) was selected as one of Project Stargate’s “key initial technology partners.” The company pioneered the graphics processing units (GPUs) that have become the staple providers of the specific types of computing horsepower that AI requires.
Nvidia GPUs are the gold standard for AI processing — most of which takes place in data centers. As a result, the company dominates the niche, controlling 98% of the market in 2023, similar to its market share in 2022. While the figures for 2024 have yet to be collated, industry watchers expect to learn that Nvidia retained an industry-leading share of the data center GPU market.
There have been concerns among some investors that Nvidia’s growth may have peaked, but the Stargate project’s scope helps illustrate the long runway ahead of it. In fact, Melius Research analyst Ben Reitzes surmises the chipmaker could be the biggest single beneficiary of Project Stargate, as “well over $100 billion” of its budget could go to Nvidia.
Trading at just 33 times next year’s expected earnings, Nvidia is attractively priced in light of its ongoing opportunities.
2. Microsoft
OpenAI, the creator of ChatGPT, has a long-standing relationship with Microsoft (NASDAQ: MSFT), so it makes sense the company would be tapped as a supplier. The press release noted that the initiative “builds on the existing OpenAI partnership with Microsoft” and that the company would continue to “increase its consumption of Azure,” Microsoft’s cloud infrastructure service.
Microsoft has made it crystal clear that demand for AI is driving its cloud growth. CEO Satya Nadella noted that in its fiscal 2025 first quarter (which ended Sept. 30), Azure Cloud took share from its rivals, growing 34% year over year, compared to the industry’s 24% growth rate. Nadella also noted that 12 percentage points of that growth was the result of demand for AI-related services. Perhaps more importantly, he pointed out that “demand continues to be higher than our available capacity.”
The company has already taken steps to address that imbalance. In a blog post earlier this month, Microsoft Vice Chair and President Brad Smith noted the company is on track to invest $80 billion in data centers “to train AI models and deploy AI and cloud-based applications around the world.”
The company was quick off the blocks to provide AI solutions, giving it a head start that’s now paying off. The combination of unrelenting demand for AI and Microsoft’s leadership position in the space suggests that the best is likely yet to come.
Microsoft stock currently trades for 34 times next year’s expected earnings, a reasonable valuation given its place in the AI ecosystem.
3. Arm Holdings
Arm Holdings (NASDAQ: ARM) also has a lot to gain from the Stargate project, thanks largely to its close ties to Nvidia and its contributions to its AI-centric chips. In an interview this week, CEO Rene Haas said, “It’s a big, big, deal.”
While Nvidia has begun shipping its new Blackwell processors, a look at its previous top-of-the-line Grace Hopper GH200 Superchip can help provide context. The GH200 combines CPU and GPU technology on the same processor to meet the rigorous demands of AI. It incorporates two Grace CPUs, each of which contains 72 Arm V9 cores, for a total of 144 CPU cores contained in each chip. Reports suggest the Blackwell platform contains the same number of these high-end cores, which bodes well for Arm.
In an interview last year, CEO Rene Haas noted that many of Arm’s customers were shifting to the V9 and using more of these cores per device. That’s important, because the royalty rate for the V9 is twice that of its predecessor, which suggests Arm’s sales growth will continue to accelerate.
Arm’s rapid growth has been accompanied by a commensurate increase in its valuation, though the most commonly used metrics fall short in assessing high-growth stocks. Using the more appropriate price/earnings-to-growth (PEG) ratio, Arm’s valuation clocks in at 0.24. Any stock with a positive number less than 1 for that metric is generally viewed as being undervalued.
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Danny Vena has positions in Microsoft and Nvidia. The Motley Fool has positions in and recommends Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.