While giants like chipmaker Nvidia (NVDA) dominate most AI headlines, a group of smaller companies is quietly benefiting from the massive spending happening behind the scenes. According to five-star Bank of America (BAC) analyst Vivek Arya, these lesser-known players are essential to making AI systems actually work. Arya explained that although these firms don’t have Nvidia’s huge margins, they often serve as primary suppliers of critical technologies. As a result, there is meaningful demand for their products as AI infrastructure continues to scale.
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More specifically, Arya highlighted six small and mid-cap companies that he views as key beneficiaries of the AI buildout:
- Credo (CRDO) – designs and supplies active electrical cables that help GPUs communicate efficiently inside large AI data centers
- Astera Labs (ALAB) – designs high-speed connectivity solutions using PCIe 6.0 to move data between processors and hardware
- MKS Instruments (MKSI) – manufactures precision power, vacuum, and process-control systems used in semiconductor fabrication
- Advanced Energy (AEIS) – designs and manufactures high-voltage and precision power solutions for semiconductor manufacturing equipment
- MACOM (MTSI) – designs high-speed analog and optical semiconductor components that enable data transmission
- Teradyne (TER) – builds automated testing equipment that verifies chips and components function properly before shipment
These companies support everything from data movement to chip production and validation, thereby making them vital parts of the AI supply chain.
Interestingly, Bank of America estimates that the total market for AI data center systems could exceed $1.2 trillion by 2030. And while AI accelerators may capture around $900 billion, roughly $300 billion will flow to secondary technologies like networking, interconnects, and power systems. Still, Arya warned that pricing pressure is a real risk for these suppliers. Unlike Nvidia’s 70%+ margins, most of these companies operate in the 35%–40% range, and prices for components can fall quickly. Even so, Arya believes that their niche technologies put them in a strong position as AI infrastructure continues to expand.
Which AI Stock Is the Better Buy?
Turning to Wall Street, out of the six lesser-known stocks mentioned above, analysts think that CRDO stock has the most room to run. In fact, CRDO’s average price target of $219.44 per share implies more than 51% upside potential.
