The artificial intelligence sector continues to drive significant shifts across the technology industry, impacting everything from chip manufacturing to cloud infrastructure and enterprise software. Taiwan Semiconductor Manufacturing (TSMC) stands at the forefront, benefiting immensely as companies like Nvidia, Advanced Micro Devices, Alphabet (Google), and Amazon rely on its advanced AI chips. High-performance computing, crucial for AI, constituted 57% of TSMC's $33.1 billion revenue in Q3, a notable increase from 39% in Q3 2022. Major cloud providers are making substantial investments to support this AI boom. Oracle, for instance, has taken on over $80 billion in debt to construct 72 multicloud data centers specifically designed for high-performance AI computing. Similarly, Microsoft Azure plans to double its data center size within the next two years, aiming to boost its cloud computing sales. Applied Digital Corp. and Lumentum Holdings Inc. have seen their stocks surge over 200% in 2025, with Applied Digital building high-performance data centers, including an expansion at its Ellendale campus to 400 MW, and Lumentum providing critical optical components for high-speed AI networks. Even Seagate Technology Holdings is joining the Nasdaq-100 Index, highlighting its growing role in mass capacity storage vital for AI and data centers. Big tech giants like Microsoft and Alphabet (Google) are projected by Wall Street analysts to reach market values of $5 trillion in 2026, largely due to their AI advancements. Microsoft's generative AI copilots, including Microsoft 365 Copilot, boast over 150 million monthly active users. Google is integrating generative AI features like AI Overviews and AI Mode into its search advertising, while Google Cloud gains market share through its AI strengths. Broadcom, a key supplier of custom AI processors and networking solutions to companies like Google and OpenAI, reported $6.5 billion in AI revenue, a 74% year-over-year increase, despite a recent stock drop. Beyond infrastructure, AI is transforming enterprise software and services. Palantir's stock has surged approximately 2,700% since 2023, driven by its AI software, with U.S. commercial revenue jumping 121% to $397 million in Q3. Akamai is also evolving, transforming into an edge-native cloud and AI compute platform, with its compute revenue growing almost 40% year over year. Even the hiring platform Indeed anticipates AI-assisted hiring will boost its profits and sales, while Deutsche Bank raised its price target for Accenture plc, reflecting optimism about its role in AI. Fermi, a new IPO, is building an 11-gigawatt private power grid for AI data centers, expecting to deliver first power in 2026 despite a recent customer setback.
Key Takeaways
- TSMC is a primary beneficiary of AI data center demand, with high-performance computing making up 57% of its Q3 revenue, supplying chips to Nvidia, AMD, Alphabet, and Amazon.
- Oracle has invested over $80 billion in debt to build 72 multicloud data centers focused on high-performance computing for AI.
- Applied Digital Corp. and Lumentum Holdings Inc. stocks have risen over 200% in 2025 due to strong AI infrastructure demand, with Applied Digital expanding its Ellendale campus to 400 MW.
- Microsoft and Alphabet (Google) are predicted by analysts to reach $5 trillion market values in 2026, driven by their AI initiatives.
- Microsoft 365 Copilot has over 150 million monthly active users, and Microsoft Azure plans to double its data center size in the next two years.
- Broadcom's AI revenue reached $6.5 billion, a 74% year-over-year increase, as it supplies custom AI processors and networking solutions to major companies like Google and OpenAI.
- Palantir's stock surged approximately 2,700% since 2023 due to its AI software, with U.S. commercial revenue growing 121% in Q3.
- Seagate Technology Holdings will join the Nasdaq-100 Index, focusing on mass capacity storage for AI and developing HAMR-based Mozaic drives.
- Akamai is transforming into an edge-native cloud and AI compute platform, with its compute revenue growing almost 40% year over year.
- Indeed's CEO believes AI-assisted hiring will boost the job search platform's profits and sales, with Recruit Holdings reporting a 13% jump in operating profit.
Oracle stock drops 42% but AI bet offers big growth
Oracle's stock dropped 16.5% on December 11, 2025, and is now 42% below its highest price. The company has taken on over $80 billion in debt to build 72 multicloud data centers. These centers will focus on high-performance computing for AI, aiming to reduce latency and costs. Despite the risks and debt, Oracle's core software business generates strong cash. Investors with high risk tolerance might find Oracle's bold AI infrastructure bet worthwhile.
TSMC poised to win big from booming AI data center demand
Taiwan Semiconductor Manufacturing, or TSMC, is set to benefit greatly from the huge increase in data center spending. Companies like Nvidia, Advanced Micro Devices, Alphabet, and Amazon depend on TSMC to make their advanced AI chips. In the third quarter, high-performance computing made up 57% of TSMC's $33.1 billion revenue, a big jump from 39% in Q3 2022. TSMC's efficient chips also help tech companies save money on power. The company's stock trades at 28 times earnings, making it seem fairly priced despite its strong market position.
Two AI stocks Applied Digital and Lumentum show huge growth
Applied Digital Corp. (APLD) and Lumentum Holdings Inc. (LITE) have seen their stocks rise over 200% in 2025 due to strong AI infrastructure demand. Applied Digital builds and runs high-performance data centers for AI, expanding its Ellendale campus to 400 MW with CoreWeave Inc. as a tenant. The company aims for quick 12-14 month build times and has 700 MW under construction. Lumentum Holdings creates optical and photonic technologies, providing key components like transceivers and lasers for high-speed data centers and AI networks. Both companies are expected to continue growing as AI infrastructure expands.
Applied Digital and Lumentum AI stocks show strong 2025 gains
Applied Digital (APLD) and Lumentum Holdings (LITE) stocks have surged over 200% in 2025, driven by the artificial intelligence boom. Applied Digital builds and runs high-performance computing data centers, securing long-term leases with major cloud providers. Lumentum Holdings creates critical optical networking and photonics products for high-speed communication networks that support AI data centers. Both companies benefit from the huge demand for AI computing power and advanced networking equipment. Their strong positions and market trends suggest continued growth.
Seagate joins Nasdaq 100 sees big boost from AI storage
Seagate Technology Holdings (STX) reported strong quarterly results with double-digit revenue growth. The company will join the Nasdaq-100 Index on December 22, 2025, highlighting its growing role in AI and cloud storage. Seagate focuses on mass capacity storage, which is vital for AI and data centers, and is developing HAMR-based Mozaic drives. Analysts project Seagate to reach $12.0 billion in revenue and $2.5 billion in earnings by 2028. This inclusion and AI demand could significantly change Seagate's investment outlook.
Deutsche Bank raises Accenture stock target on AI optimism
Deutsche Bank analyst Nate Svensson increased his price target for Accenture plc (ACN) to $265 from $235 on December 10. The bank maintained its Hold rating on the stock. This change reflects growing positive feelings about Accenture's role in artificial intelligence. Accenture is also known as one of the top blue-chip stocks that offers increasing dividends to its shareholders.
Analysts predict Alphabet and Microsoft could reach 5 trillion dollars
Wall Street analysts believe Alphabet and Microsoft could reach market values of $5 trillion in 2026. Alphabet is using generative AI features like AI Overviews and AI Mode to adapt its search advertising. Its Google Cloud is also gaining market share due to its strength in artificial intelligence. Microsoft reports strong use of its generative AI copilots, including Microsoft 365 Copilot, with over 150 million monthly active users. Microsoft Azure plans to double its data center size in the next two years, which should boost its cloud computing sales.
Broadcom stock drops 17% despite strong AI demand
Broadcom's stock rose 46% in 2025, reaching an all-time high of $414.61. However, shares fell over 17% in three days after its fiscal fourth-quarter earnings report. Investors worried about lower gross margins from its growing AI revenue, even though AI revenue hit $6.5 billion, up 74% year over year. Broadcom supplies custom AI processors and networking solutions to major companies like Google and OpenAI. Despite the recent drop, Wall Street analysts remain positive, with an average price target of $455 per share.
Indeed CEO says AI will boost hiring platform growth
Indeed.com's CEO, Hisayuki "Deko" Idekoba, believes AI-assisted hiring will boost the job search platform's profits and sales. Indeed, owned by Recruit Holdings Co., uses AI to help companies improve hiring, set pay, and adjust job requirements. The company is deploying AI agents to customers and sees its integrated platform as a key advantage. In the latest quarter, Recruit reported a 13% jump in operating profit on $5.9 billion in sales. Despite the stock being down 24% this year, Recruit plans to buy back Ā„250 billion of its shares by April 2026.
Fermi stock rebounds after losing key customer for AI power grid
Fermi (FRMI), a new IPO stock from October 2025, recently saw its shares plunge over 50%. This happened after its first potential anchor customer canceled a $150 million construction agreement for the Project Matador campus in Texas. Fermi is building an 11-gigawatt private power grid for AI data centers, using a mix of natural gas, nuclear, solar, and battery storage. Despite the setback, Fermi remains confident it can build the campus and expects to deliver first power in 2026. The company has also signed Xcel Energy for 200 megawatts of electrical capacity.
Analyst predicts Palantir stock will drop sharply in 2026
Palantir's stock has surged about 2,700% since 2023, driven by its AI software. The company's software acts as an "operating system for the modern enterprise," helping businesses and governments. In the third quarter, commercial revenue grew 73% to $548 million, and government revenue increased 55% to $633 million. U.S. commercial revenue alone jumped 121% to $397 million. Despite this strong growth, an analyst believes Palantir's stock is highly overvalued, trading at 119 times forward earnings, and predicts a significant drop in 2026.
Akamai transforms into AI cloud platform with strong growth
Akamai, a cybersecurity company, is changing its business to become an edge-native cloud and AI compute platform. It uses its global network to offer faster and cheaper AI inference services. In the third quarter of 2025, Akamai's compute revenue grew almost 40% year over year, and its operating margins improved. The Nvidia-powered Akamai Inference Cloud is expanding, and its security products are also growing. Akamai currently trades at a 50% discount compared to similar cloud and cybersecurity companies.
Sources
- Down 42% From Its High, Is Oracle the Best AI Growth Stock to Buy in 2026?
- This AI Chip Stock Could Be the Real Winner as Data Center Demand Explodes in 2026
- Reasons to Buy These 2 AI Stocks Offering Triple-Digit Returns in 2025
- Reasons to Buy These 2 AI Stocks Offering Triple-Digit Returns in 2025
- Nasdaqā100 Inclusion and AI Storage Momentum Could Be A Game Changer For Seagate (STX)
- Deutsche Bank Lifts Accenture (ACN) Target on Improving AI Sentiment
- 2 Artificial Intelligence (AI) Stocks to Buy Before They Soar to $5 Trillion in 2026, According to Wall Street
- Broadcom Canāt Stop Falling. Overreaction or AI Stock Warning Sign?
- AI-Assisted Hiring Will Drive Indeedās Growth, Recruit CEO Says
- Why New AI IPO Stock Fermi Is Rebounding After Plunging Over 40% in 2 Days
- Prediction: This Popular Artificial Intelligence Stock Will Fall Hard in 2026
- This cybersecurity stock is emerging as an AI play. How to play it with options heading into the new year
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