Cato Pushes for US AI Infrastructure Surge: Which 6 Stocks Win Biggest from the Buildout?
Bloomberg reported this week that Cato Institute analyst Frazier is urging the US to dramatically increase investment in artificial intelligence infrastructure, warning that lagging behind global rivals like China risks ceding technological dominance. Frazier's call comes amid private sector capex exploding—hyperscalers like Amazon and Microsoft planning $200B+ in data center builds this year alone—highlighting a pivotal moment: will public funds supercharge the AI infra boom?
The stakes are enormous. AI models demand exponentially more compute power, with data center power needs projected to double US electricity demand by 2030. Private investment has surged, but Frazier argues government subsidies, tax credits, and direct spending are essential to match adversaries. This tailwind favors chipmakers, server builders, equipment suppliers, and colocation giants. Below, we analyze six US-listed leaders poised to capture the surge, backed by financials and AI exposure.
NVIDIA: GPU Kingpin at the Epicenter
NVIDIA dominates AI training and inference with its CUDA ecosystem and Blackwell GPUs, powering 90%+ of large AI models. Cato's push for infra spend directly boosts NVDA's data center revenue, which hit $130B in FY2026 (ending Jan 2026), up 114% YoY. Sovereign AI factories—like those from Meta and OpenAI—further entrench its moat.
| Metric | Value (TTM/FY2026) |
|---|---|
| Market Cap | $4.3T |
| Revenue | $215B (up 65% TTM) |
| EBITDA Margin | 67% |
| P/E TTM | 36x |
| Price Return YTD | -3% (3M: +7%) |
Verdict: Top bull. Unrivaled exposure; buy dips as infra spend accelerates.
Dell Technologies: AI Server Shipment Machine
Dell ships purpose-built AI servers via its AI Factory with NVIDIA, booking $64B in AI orders for FY2026 with $43B backlog. Recent news highlights Dell's first GB300 desktops for agents, tying directly to Cato's infra call as enterprises build on-prem clusters.
FY2026 revenue hit $113B (up from $88B prior FY), with AI servers at $25B shipped. Earnings calls emphasize 100% YoY AI growth into FY2027.
| Metric | Value (TTM/FY2026) |
|---|---|
| Market Cap | $114B |
| Revenue Growth TTM | 19% |
| EBITDA Margin | 8% (expanding) |
| EV/EBITDA | 15x |
| Price Return 1M | +35% (YTD: +22%) |
Verdict: Strong bull. Proven execution turns backlog into cash flow.
Applied Materials: The Pick-and-Shovel for Chip Fabs
AMAT supplies wafer fab equipment for AI chips, with AI driving leading-edge logic and HBM DRAM ramps. As US fabs expand under CHIPS Act (echoing Cato's plea), AMAT's tools are essential—services revenue grows with installed base.
FY2025 revenue $28B (up 4% YoY), EPS up 27% TTM. Backlog stable, DRAM leading recovery.
| Metric | Value (TTM/FY2025) |
|---|---|
| Market Cap | $283B |
| Revenue Growth TTM | 2% (AI inflections ahead) |
| Gross Margin | 49% |
| P/E TTM | 36x |
| Price Return 3M | +39% (YTD: +29%) |
Verdict: Bull. Secular AI tailwinds offset China mix; undervalued vs. peers.
Equinix: Data Center Landlord for the AI Era
EQIX operates 260+ global centers, interconnection critical for AI workloads—60% of Q4 2025 deals AI-driven. Cato's infra push amplifies demand for colocation as hyperscalers lease vs. build.
FY2025 revenue $9.3B (up 6% YoY), bookings +42% YoY. Guidance: 9-10% revenue growth FY2026.
| Metric | Value (TTM/FY2025) |
|---|---|
| Market Cap | $98B |
| Revenue Growth TTM | 6% |
| EBITDA Margin | 45% |
| EV/EBITDA | 28x |
| Price Return 3M | +32% (YTD: +29%) |
Verdict: Bull. Recurring revenue moat; AI hyperscaler tenants lock in growth.
Amazon: AWS Capex Fuels Its Own AI Dominance
AWS leads cloud AI infra, investing $200B CapEx (mostly data centers) while renting NVDA GPUs. Cato's public spend complements AMZN's private push—Bedrock and Trainium chips hit $10B+ run-rate.
FY2025 revenue $717B (up 12% YoY), AWS at 24% growth. Cloud revenue $142B annualized.
| Metric | Value (TTM/FY2025) |
|---|---|
| Market Cap | $2.3T |
| Revenue Growth TTM | 12% |
| EBITDA Margin | 23% |
| P/E TTM | 29x |
| Price Return 3M | -4% (YTD: -7%) |
Verdict: Bull. Self-reinforcing capex cycle; dip buyer.
Microsoft: Azure's AI Factory Bet
MSFT's Azure invests heavily in AI infra, with $50B+ quarterly cloud revenue and OpenAI ties. Agentic AI (Copilot) demands more capacity—Cato's call accelerates sovereign builds.
FY2025 revenue $282B (up 17% YoY), cloud +26%. AI capacity doubled.
| Metric | Value (TTM/FY2025) |
|---|---|
| Market Cap | $2.8T |
| Revenue Growth TTM | 17% |
| EBITDA Margin | 63% |
| P/E TTM | 23x |
| Price Return YTD | -15% |
Verdict: Bull. Highest margins; valuation attractive post-pullback.
Ranked Conviction: The AI Infra Winners
- NVIDIA (highest exposure, growth monster). 2. Dell (AI servers scaling fast). 3. Applied Materials (fab enabler). 4. Equinix (passive landlord play). 5. Amazon (capex leader). 6. Microsoft (premium but pricey).
All benefit uniformly from Cato's urged tailwind, but NVDA and Dell offer purest leverage. Allocate 40% to semis/servers, 30% data centers/cloud.
Risks to Watch: CHIPS Act delays if policy shifts; power shortages capping builds (monitor EIA data); China export curbs hitting NVDA/AMAT (watch BIS rules). Key signals: Q1 hyperscaler capex guidance >$60B; NVDA Blackwell ramps >50% of shipments; EQIX AI deal % >70%.