Key facts
- The AI infrastructure trade is experiencing a rebound after a significant downturn.
- CoreWeave and Nebius reported substantial revenue growth and strong order backlogs.
- Hyperscalers like Microsoft and Amazon are showing successful monetization of AI investments.
- JPMorgan has increased its 2026 S&P 500 price target.
- Nvidia's upcoming earnings report is seen as a key event for the AI trade.
The AI infrastructure trade is showing signs of recovery, with key companies reporting strong financial results and robust order backlogs. This resurgence follows a period of investor concern that led to a significant drop in the PHLX Semiconductor Sector (SOX) index. Companies like CoreWeave, a data center firm, and Nebius, an AI cloud storage provider, posted impressive year-over-year revenue growth, injecting optimism back into the sector.
This positive momentum is further supported by hyperscalers such as Microsoft and Amazon, which have demonstrated their ability to monetize substantial investments in AI buildouts, as evidenced by their strong Q2 earnings calls. This development has prompted analysts at JPMorgan to raise their 2026 S&P 500 price target to 8,000.
Brad Neuman, director of market strategy at Alger, expressed a continued positive outlook, noting that his firm is more concerned about the supply side of AI infrastructure, such as data center capacity and grid connectivity, rather than demand, which he sees as rapidly growing.
The AI trade now looks set for a crucial test with Nvidia's upcoming earnings report on August 26. Despite a recent decline in its stock price, strong performance from key partners and the broader AI ecosystem could position Nvidia for a strong quarterly result. As the largest company globally by market capitalization and a bellwether for the AI sector, Nvidia's performance is expected to significantly influence the broader market.