Microsoft Stock And 2 AI Infrastructure Picks For Rising Data Center Demand

US 10 year Treasury yields are testing recent highs as investors price in heavier government borrowing and ongoing inflation concerns. Higher borrowing costs can reward companies that help others work smarter with fewer resources. That includes businesses linked to AI and tools like ChatGPT. This article looks at 3 stocks from our AI Stocks screener that sit at the heart of this trend and explains how they fit the current backdrop.

The stocks below are just a small sample. The full screen highlights 676 more AI companies with equally compelling narratives that are not covered here. Head straight into the Artificial Intelligence/ AI Stocks screener to identify, filter and analyze the AI stocks that best fit your own conviction and risk profile.

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Microsoft (MSFT)

Overview: Microsoft is a global technology company best known for its Windows operating system, Office and Microsoft 365 productivity apps, and the Azure cloud platform, which now includes Azure AI and Azure OpenAI Service that power large language models, Copilot features and other generative AI tools for businesses. Alongside this AI and cloud focus, Microsoft also generates revenue from LinkedIn, gaming through Xbox, and a range of devices and services sold worldwide.

Operations: Microsoft generates around US$140b from Productivity and Business Processes, US$138b from Intelligent Cloud and US$54b from More Personal Computing, with revenue split between the United States at about US$171b and other countries at about US$161b.

Market Cap: US$3.6t

Investors looking at AI infrastructure may find Microsoft interesting because Azure AI, the Azure OpenAI Service and Microsoft 365 Copilot give it a direct link into hosting and monetising large language models rather than just using them. The company is committing tens of billions of dollars to data centers, custom Maia AI chips and a reported cloud backlog in the hundreds of billions. Together, these help underpin visibility on future AI workloads, although this spending also raises questions about how efficiently that capital is used. At the same time, regulators in the US, UK and EU are closely scrutinising Microsoft’s cloud and Copilot pricing, which could reshape parts of the business model. For investors, that mix of scale, AI exposure and regulatory risk is exactly where the most interesting part of the Microsoft story lies.

Microsoft’s AI build out and regulatory scrutiny could be telling very different stories about future earnings quality. Get the full context in the analysis report for Microsoft

Build your own AI infrastructure shortlist

Microsoft and the two other stocks in this list are just a sample of what can surface from a single screener run. Use our flexible Screener to blend filters such as valuation, future growth, balance sheet strength and risks for yourself, or start with any of our curated Investing Ideas.

Cerebras Systems (CBRS)

Overview: Cerebras Systems is an artificial intelligence infrastructure company that designs and manufactures wafer scale chips and full rack AI systems specifically built to accelerate training and inference for large language models and other generative AI workloads. Its wafer scale engine keeps compute and on chip memory extremely close together. This structure is aimed at helping hyperscalers, foundation model labs and enterprises run ChatGPT style and sovereign AI projects at higher speed and lower latency than traditional GPU clusters.

Operations: Cerebras Systems currently generates about US$681 million in revenue from its semiconductor based AI compute platform, with around US$237 million from the United States and about US$444 million from Europe, the Middle East and Africa.

Market Cap: US$52.3b

Investors interested in AI infrastructure may find Cerebras Systems compelling because its wafer scale engine and rack level platform are tightly aligned with the shift toward heavier inference and agentic AI workloads, and it already works with hyperscale customers on frontier models and high speed inference services. At the same time, the stock trades on rich expectations while the business is still loss making, relies on higher risk external funding and has meaningful customer concentration. The combination of a large backlog, fast developing partnerships and balance sheet and volatility questions creates a high potential but high risk way to gain direct exposure to the AI accelerator theme.

Cerebras Systems is priced for rapid AI adoption while its losses, funding needs and customer concentration keep many investors cautious. Get the full story in the analysis report for Cerebras Systems

Oracle (ORCL)

Overview: Oracle is a long established enterprise software and cloud company that runs critical systems for businesses and governments worldwide, with Oracle Cloud Infrastructure, autonomous database and GenAI services now giving customers a way to train, fine tune and run large language models alongside applications like Fusion and NetSuite. These AI and cloud tools sit next to Oracle’s broader database, license and hardware offerings, so the pure AI segment is only part of a much larger business.

Operations: Oracle generates about US$58.5b from cloud and software, alongside around US$5.7b from services and US$3.1b from hardware, with the United States contributing roughly US$39.8b of revenue and other countries about US$27.5b.

Market Cap: US$411.3b

Oracle gives you exposure to AI infrastructure and applications through OCI, autonomous database and GenAI agents, while still earning most of its revenue from broader cloud and software contracts. The company reports net margins above 25%, and a very large AI related backlog indicates significant embedded demand. At the same time, heavy data center and GPU spending is funded alongside a sizeable debt load and a dividend that is not well covered by free cash flow. Recent AI wins across healthcare, defense and multi cloud partnerships illustrate how widely Oracle is positioning its stack, while execution, financing costs and the pace of AI project rollouts remain important considerations for investors.

Oracle’s AI backlog and 25%+ net margins hint at a potential business model shift that many investors may be underestimating. See how that balance of cloud growth, debt and dividends plays out in the analysis report for Oracle

Seeking Alternatives Before Momentum Flies

Fresh ideas can move fast, and early momentum often fades once the crowd catches on. Scan these under the radar lists while it matters and get in early.

• Spot resilient cash generators before yield hunters pile in by reviewing a curated 12 dividend fortresses that could help support portfolios when income matters most.
• Track where AI profits meet discipline, not just hype, by scanning a rigorously filtered group of 75 profitable AI stocks that aren't just burning cash before expectations get fully priced in.
• Catch the groundwork for a potential energy and infrastructure breakout through a focused set of 92 nuclear energy infrastructure stocks while many investors are still looking the other way.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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