The earnings of Big Tech have again brought investors’ attention to the massive spending on artificial intelligence (AI) infrastructure. Analysts at JPMorgan expect AI spending by major U.S. cloud providers and other tech companies to stay elevated well into 2026, extending a multi-year investment cycle expected to benefit chip companies like Nvidia (NVDA) and networking firms related to AI data centers.
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Notably, Alphabet (GOOGL) has increased its capital spending plans to the range of $91 billion to $93 billion for 2025, up from its prior budget of $85 billion. Likewise, Meta Platforms (META) now expects its 2025 capex to be in the range of $70 billion to $72 billion, up from the previous estimate of $66 billion to $72 billion.
While Microsoft (MSFT) hasn’t provided a specific outlook, the company said its Q1 FY26 capex of $34.9 billion was higher than expected. MSFT expects the growth rate in Fiscal 2026 capex to exceed that in FY25.
JPMorgan Expects Chip Stocks to Benefit from High AI Spending
JPMorgan noted that Microsoft, Alphabet, and Meta Platforms have each raised their 2025 capital expenditure budgets and indicated further increases in 2026. These tech giants have reinforced expectations for continued growth in AI-related investments in compute, networking, and storage. JPMorgan stated that the spending updates by tech giants “corroborate” its view that cloud and hyperscale data center spending will remain “structurally elevated” over the longer term as demand for AI computing continues to rise.
In particular, analysts at JPMorgan see Nvidia, Broadcom (AVGO), Marvell Technology (MRVL), and Advanced Micro Devices (AMD) as key beneficiaries from rising demand for AI servers and chips. They also expect memory makers Micron (MU) and Western Digital (WDC), as well as networking firms Allegro MicroSystems (ALGM) and MACOM Technology (MTSI), to gain from continued spending on AI infrastructure. Specifically, JPMorgan expects Nvidia to benefit from accelerating GPU (graphics processing unit) demand, while Broadcom and Marvell are well-positioned to address the demand for their custom AI processors developed with Google, Meta Platforms, and Amazon (AMZN).
Looking ahead, JPMorgan expects AI-related capital expenditures to continue rising through 2027 as major tech companies compete to develop new models and deploy AI tools across their core businesses.
Other Wall Street brokerages are also upbeat about continued AI spending. For instance, according to CNBC, Citi stated, “AI party continues – good for AMD, AVGO, MU, and NVDA.” Analysts at the bank added that the higher capex outlook from Alphabet, Microsoft, and Meta Platforms supports their view that AI spending remains strong, positively impacting AI-exposed stocks such as AMD (19% of sales), Broadcom (33% of sales), Micron (18% of sales), and Nvidia (88% of sales).
Wall Street’s Ratings for AI Chip Stocks
Let’s look at Wall Street’s ratings for some of the chip stocks that are expected to gain from elevated AI spending.
Currently, Wall Street has a Strong Buy consensus rating on Nvidia, Broadcom, Micron, and Western Digital. Analysts see the highest upside potential in NVDA stock.
