Key Takeaways
- Global data‑center construction is projected to cost nearly $3 trillion by 2028, fueled by the rapid rollout of AI workloads.
- Arm Holdings leverages its ubiquitous CPU architecture to earn royalties on every chip shipped, positioning it to capture a growing share of data‑center CPUs as AI models demand more compute.
- IREN is a fast‑growing data‑center builder with a sizable power portfolio; its current valuation may not reflect the long‑term upside of its overseas expansion and repeatable build‑out model.
- Nvidia continues to dominate AI hardware, with its data‑center revenue nearly doubling and the upcoming Vera Rubin platform expected to drive an 81% revenue jump to $391 billion this year.
- All three companies trade at valuations that investors view as attractive entry points for long‑term exposure to the AI‑driven infrastructure boom.
Overview of AI‑driven data‑center spending
The efficiency and speed of automating workflows with artificial intelligence (AI) agents have triggered a massive surge in enterprise spending in 2026. Morgan Stanley expects new global data‑center construction costs to total nearly $3 trillion through 2028. If the AI data‑center build‑out is still in the early innings, investors could potentially build tremendous wealth with leading AI companies over the next 20 years. This backdrop sets the stage for three standout players: Arm Holdings, IREN, and Nvidia.
Arm Holdings – Royalty‑based CPU leader
Arm is one of the leading chip designers. Its architecture is found in virtually every smartphone, and it has a huge opportunity to supply core technology for data centers. The latest results show why the stock is surging higher in 2026. “Revenue hit a record $1.49 billion last quarter, up 20% year over year.” An attractive feature of the business is that it earns royalties on every chip shipped using its architecture, making Arm highly profitable. Demand for Arm’s energy‑efficient chips should continue to grow as AI models become smarter, requiring more compute capacity, which is already in short supply. Leading tech companies, including some of the “Magnificent Seven,” are using Arm‑based chips in their AI compute systems. Management expects Arm to hold the largest share of data‑center central processing units (CPUs) by the end of the decade, driven by its superior energy efficiency and rising core counts in new CPU designs. That should lift data‑center royalty revenue, which is on pace to double again over the next year. Top semiconductor companies already trade at trillion‑plus market caps—but not Arm. It looks expensive on a price‑to‑earnings basis, but given the growing demand for Arm‑based chips, it seems on course to eventually join the trillion‑dollar club. Its current $380 billion market cap looks modest compared with what it may be worth in the coming decades, as data centers grow and use more chips to handle future AI workloads.
IREN – Aggressive data‑center builder
Growing AI adoption is creating a shortage in data‑center capacity. IREN is emerging as one of the best‑in‑class data‑center builders. The stock has soared 385% over the past year, yet it still trades at a relatively low market cap of about $18 billion. For a company with a growing portfolio of 5 gigawatts of grid‑connected power, that valuation may undervalue its long‑term growth in an AI‑driven economy. IREN has already signed two long‑term cloud contracts with Microsoft and Nvidia. It’s on track to bring 480 megawatts of new capacity online this year, and management expects to finish 2026 with $4.4 billion in annualized revenue. It’s also planning data centers in Spain and Australia, showing expansion potential beyond North America. The company’s market cap seems to fairly value the multibillion‑dollar contracts with Microsoft and Nvidia but is placing no value on its future data‑center pipeline, especially overseas. In a world short on compute, IREN’s power portfolio could become more valuable over time. Management is developing a blueprint for repeatable, fast processes to build new data centers. It does everything in‑house, including construction and design. It’s expected to have over 1.2 gigawatts of its power portfolio online in 2027, and management anticipates this accelerating over time.
Nvidia – AI hardware powerhouse
As investors pursue opportunities in CPUs, XPUs, and memory, Nvidia’s valuation has compressed, creating an attractive entry point for a new investment. Its data‑center revenue nearly doubled last quarter, as shipments of its chip systems remain robust, and the upcoming Vera Rubin platform points to continued momentum. “CEO Jensen Huang is a visionary leader worth backing. Just nine years ago, gaming GPUs drove most of Nvidia’s revenue. Huang’s ability to identify new markets where GPUs matter is a core reason to buy and hold the stock for the long haul.” Case in point: Nvidia’s growing CPU business. The new Vera CPUs are on track to reach $20 billion in revenue this year, more than a third of Intel’s revenue. Demand is expected to be robust for Nvidia’s next‑generation Vera Rubin platform, which uses multiple chip types to power agentic AI workloads. This is a key catalyst for growth heading into next year, with analysts expecting total revenue to rise 81% this year to $391 billion. The chip industry is fiercely competitive, so Nvidia has to stay on the cutting edge to keep growing. But it has the leadership and significant resources to be a leading AI hardware supplier for the long term, yet the stock trades at just 22 times this year’s earnings estimate.
Investment outlook
Taken together, the three firms illustrate different facets of the AI infrastructure boom: Arm supplies the energy‑efficient CPU foundation, IREN builds the physical facilities that house the compute, and Nvidia provides the accelerated processors that drive AI workloads. Each enjoys structural tailwinds—rising AI demand, scarce data‑center capacity, and a shift toward heterogeneous computing—while trading at multiples that many analysts view as reasonable given their long‑run growth prospects. For investors seeking exposure to the multi‑trillion‑dollar data‑center expansion expected through 2028, these companies represent compelling candidates to watch.
https://www.fool.com/investing/2026/06/28/3-artificial-intelligence-ai-stocks-id-buy-now-and/