The AI Investment Boom: Key Players to Watch for 2025

Artificial intelligence (AI) continues to be a game-changer in the world of technology and finance. No surprise here: companies that dive deep into AI infrastructure have been at the forefront of the bull market over the past year. With spending on AI technology surging, there are exciting investment opportunities on the horizon. Let’s explore two significant players in the AI infrastructure space that could deliver impressive returns by 2025.

Dell Technologies: A Powerhouse Beyond PCs

You might know Dell Technologies (NYSE: DELL) as your go-to brand for PCs, but it’s much more than that. Dell is a key force in helping businesses revamp their IT capabilities, particularly with servers optimized for AI. While Dell’s stock has had a strong performance recently, it’s still trading at an attractive valuation compared to its long-term growth prospects.

Historically, Dell’s stock has traded with a low price-to-earnings (P/E) ratio, reflecting its ties to the slowly growing PC market. However, in a remarkable shift, the company reported an astonishing 86% year-over-year jump in its earnings per share during the second quarter. This surge is prompting Wall Street to reconsider the stock’s P/E ratio in light of anticipated growth in the server market.

Dell’s infrastructure solutions division, including server sales, is a major part of its business, contributing roughly half of its revenue. This segment saw a hefty 38% revenue increase year-over-year in Q2, and with AI server demand showing no signs of slowing, Dell is positioned for significant growth. Management announced that it shipped $3.1 billion worth of AI servers this quarter and has a backlog of $3.8 billion, indicating a robust pipeline for future sales.

The growing demand for AI infrastructure is set to enhance Dell’s profit margins and overall earnings. Analysts predict that by fiscal 2027, Dell’s earnings could nearly double to $10.77. If the stock’s P/E ratio climbs to around 20—still below the S&P 500 average—a potential target of $215 could represent a 57% upside from its current share price of $137.

Marvell Technology: Semiconductor Leader in the AI Revolution

Let’s turn our attention to another promising player: Marvell Technology (NASDAQ: MRVL). Like Dell, Marvell has seen its stock soar, benefiting from the increasing investments in AI infrastructure. As of now, its stock is up 55% year-to-date, and many believe it still has room to grow.

Marvell specializes in semiconductor products vital for data centers and networking, making it uniquely positioned to capitalize on the burgeoning AI market. In Q2, revenue from Marvell’s data center business nearly doubled compared to the previous year, reaching $881 million. This growth primarily stems from high demand for their advanced silicon solutions and networking switch products.

However, it’s worth noting that Marvell’s overall revenue declined by 5% in Q2 due to mixed results across different markets. That said, as the consumer electronics and wireless sectors recover, Marvell’s revenue is expected to rebound significantly. Management suggests that the enterprise and carrier markets are finally starting to pick up, hinting that 2025 could be a pivotal year for the company.

Currently, analysts expect Marvell’s trailing revenue of $5.3 billion to increase to over $9 billion by fiscal 2027. The stock trades at a forward P/E of 37, consistent with the past three years, indicating that it could outperform the S&P 500, which has historically delivered a 10% annualized return.

Conclusion

Both Dell Technologies and Marvell Technology stand at the forefront of the AI infrastructure boom. Each company offers unique investment opportunities, showcasing strong growth potential backed by the rising demand for AI solutions. While Dell is making significant strides in the server market, Marvell’s innovations in semiconductors position it to benefit from the expanding AI landscape.

So, as you consider your next investment, keep a close eye on these two companies. They are not just players in the game; they’re poised to lead the charge into the future of AI innovation.

The AI Buzz Hub team is excited to see where these breakthroughs take us. Want to stay in the loop on all things AI? Subscribe to our newsletter or share this article with your fellow enthusiasts.