The artificial intelligence (AI) revolution is transforming the tech landscape, and companies that provide essential infrastructure for AI applications are reaping the benefits. A recent report by Barclays predicts a significant surge in capital expenditures by hyperscale cloud companies, with a 41% increase in 2024 and a potential 15% rise in 2025. This growth is driven by the increasing demand for graphics processing units (GPUs) and custom AI chips.
Market research firm Dell’Oro Group estimates that spending on data center infrastructure will grow at a compound annual growth rate (CAGR) of 24% through 2028. This presents a lucrative opportunity for companies like Broadcom and Dell Technologies, which are direct beneficiaries of the AI-driven data center spending boom.
Broadcom, a leading manufacturer of application-specific integrated circuits (ASICs), is poised to capitalize on the growing demand for custom AI chips. ASICs are designed to perform specific tasks more efficiently than general-purpose computing chips, making them an attractive solution for AI applications. With a dominant market share of 55-60%, Broadcom is expected to generate $12 billion in revenue from its custom AI accelerators and Ethernet networking chips in the current fiscal year.
Dell Technologies is another company that stands to benefit from the AI infrastructure boom. The company’s infrastructure solutions group (ISG) has seen impressive growth, driven by increasing demand for AI servers. Dell’s ISG business grew 38% year-over-year in the second quarter of fiscal 2025, with server and networking products witnessing an 80% increase.
The AI server market is expected to grow at an annual rate of 18% through 2032, generating an annual revenue of $183 billion. Dell is well-positioned to capitalize on this growth, with its AI server pipeline expanding across both tier 2 cloud service providers and enterprise customers.
With AI driving growth in both companies, investors would do well to consider adding Broadcom and Dell Technologies to their portfolios. Both companies have seen impressive gains in 2024, and their forward-looking earnings multiples suggest that there is still room for growth. As the AI revolution continues to transform the tech landscape, these two companies are poised to reap the benefits.
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