r/valueinvesting
A.I infrastructure stocks and defense with strong moats for long run.
Author prefers AI infrastructure over AI models, expecting 5-10x returns as enterprise AI spending grows.
- AI infrastructure providers act as 'picks-and-shovels' that benefit regardless of which AI model wins.
- Fortune 500 companies have a clear, growing demand for AI to boost productivity and cut costs.
- The need for AI infrastructure is certain, offering a safer long-term investment than speculative AI model creators.
I see everyone is still chasing AI models and less on infrastructures.
I am still buying companies selling the infrastructure.
Companies like PLTR, NOW, INTU, CRM, CRDO, VRT, AVAV and ACN don't need to win the AI race. They win if AI spending keeps growing.
Every Fortune 500 company wants higher productivity, lower costs, and fewer repetitive jobs. These companies are becoming the picks-and-shovels providers for that transformation.
The AI winner is uncertain.
The need for AI infrastructure isn't. Thats why i feel they are the clear winner for long run. I am expecting another 5x-10x in less than 6 years.
That's why I'm buying and holding.
The company w/ the most moat is Nvidia bar none. And it's not about CUDA alone but that's a big part of it.
Token perf per watt, ability to ship a system anywhere nearly worldwide, put it in a private datacenter, private cloud. They are the largest infrastructure company with the most partners, relationships out there. These are the intangibles.
Amazon and Google cannot ship a box when you want to run confidential computing, when you want to stand something up in your own datacenter, when you want your engineers at work to learn, for computer science students to learn with unlimited tokens. None of them can do what Nvidia built there.
There's a new line item on their financials and it's not hyperscalers. It's for enterprise and neoclouds. It's going to be the biggest segment. Every country will need sovereign AI. Agentic AI, more token usage. There's 5b+ phones that are going to need to do more, they will hop to the edge like your telecom. They will adopt Nvidia RTX infra.
AI-RAN, 6g will connect physical AI, like robotics, cars etc and double the devices if not more.
There's no other company that can do what Nvidia will set out to do. Jensen invented the future. All roads lead back to Nvidia.
Unfortunately it's priced in
No it's not.
Institution analyst consensus price target for Nvidia is around ~$308.
It is compressed and cheap right now. Retail has piled into smaller cap names and horrible valuations that saw institutions and hedge funds piling in as well which is now undergoing a sell off with hedgefunds and instituons leaving it quickly.
I've pulled all the BofA reports in semis over the past 3 months and they have the data showing it.
AMD is actually fairly competitive for inference (running the models) even though for training (making the models) they are nowhere close. I don't see their profit margins remaining this incredibly high for long, never heard of a company sustaining such margins. Not saying they'll do bad though.
The analysts can't write down they'll do $3 trillion but that's what Jensen is saying. They have a path. I believe Jensen. I believe Jonathan Ross.
If so why would revenue growth be slowing down significantly?
INTU moat doesn't seem that durable.
I’m guessing you meant INTC, not INTU?
Still strong. Their customers base growth has slow down but their existing customers are loving the quickbook. I am one of them. Many accountants are use to it and many does not want to change.
They are drifting away. Go look at the sub for qb.
They've messed up my returns multiple times and use regulatory capture to exist. Why are they your favorite?
Here is what I'm holding. The obvious winners are Nvidia, Google, Broadcom, AMD.
Then the infrastructure that will be required regardless of AI. These companies have a strong market positions: TSM ASML VRT ANET ARM
Also holding these as I believe they have more upside potential: MRVL LRCX KLAC AMKR
Considering Dell and Intel
ASML I think is the "safest" growth stock. It literally has a monopoly and years ahead of the competitors.
Also, recurring revenue from maintenance on the machines. Once they sell one, they make money on it, until it's no longer used.
Watched video on these. Can't copy. Hundreds thousand parts. Machine size of a large bus
Software has the least moat when it comes to AI infra. Hardware is far better for investment.
The grid wins.
The picks-and-shovels logic is sound, but this list mixes two different risk profiles worth separating:
Capex-cycle plays (NVDA, VRT, CRDO): benefit directly from AI buildout spending — strong while the capex cycle runs, more exposed if it slows.
Productivity-layer compounders (PLTR, CRM, NOW, INTU): benefit as enterprises operationalize AI, not just build it. Slower monetization curve, but potentially more durable cash flows once embedded.
On INTU — the moat debate misses the core point. It was never about product quality. It's about how painful switching is for accountants who've trained their entire workflow on QuickBooks. Switching cost moats are quiet until someone removes that friction.
The thesis on each name looks very different when you actually run the fundamentals — FCF margins, revenue concentration, customer retention trends. At Stockerowl we generate on-demand fundamental reports for 10,000+ US stocks if anyone wants to stress-test the thesis before sizing a position.
can you explain the avav part? Isn't it a drone company
It is. I see war as something unavoidable in the future. When it comes to warefare, drones will be in demand because its inexpensive to make scalable and efficient. Plus it can be autonomous. Avav has gov relationship too.
CAT
le3harris Lhq. isn’t the us gov taking ownership stake in it. also it was the author of one of the biggest 0 day iOS attacks in recent years. (we only know because an employee leaked it).