Artificial intelligence has looked like a software story for the past few years. Investors bought GPUs, cloud platforms, and model companies that can run AI models for everyday users. But there is another part of the AI boom that is becoming harder to ignore: AI requires a huge amount of physical infrastructure.
A server cannot run a large AI model without power. A rack packed with accelerators cannot operate without moving enormous amounts of data or removing the heat those chips generate. That creates an interesting opportunity for investors who want exposure to AI without buying the same handful of megacap stocks.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Three companies stand out to me. They operate in very different markets, but all three are attacking physical bottlenecks created by increasingly powerful AI systems.
1. Astera Labs is solving the data movement problem
Astera Labs(NASDAQ: ALAB) may be one of the more overlooked companies in the AI infrastructure chain. Its technology sits between computing components, helping move data between CPUs, GPUs, memory, and networking equipment. That sounds less exciting than designing a GPU, but it becomes critical as AI systems grow more complex.
Astera’s newest Scorpio X-Series 320-lane fabric switch is designed for rack-scale AI systems and is built to connect large numbers of accelerators. The company has also expanded into CXL memory controllers, Ethernet connectivity, and optical interconnects. In other words, Astera is trying to become a broader connectivity platform rather than relying on a single product.
That is the part I find compelling. AI performance increasingly depends on keeping processors fed with data. Faster chips do not help much when information cannot move between them efficiently.
2. Modine is betting that AI has to be cooled
Modine Manufacturing(NYSE: MOD) is an even less obvious AI stock. Its opportunity is simple: Powerful AI servers generate a lot of heat.
Modine’s Airedale business makes cooling systems designed for data centers, including its new TurboChill 3+MW platform for high-density GPU environments. The company also entered into a long-term agreement worth more than $4 billion for Airedale cooling products through 2029, backed by a $165 million upfront payment from the customer to help fund capacity investments.
