$300B AI Gold Rush: Which Semiconductor Stock You MUST Own In 2025
AI Arms Race Heats Up: Tech Giants to Spend $310 Billion on Data Centers in 2025. Here is how YOU can cash in!
$80 Billion
That’s how much Microsoft announced it was on track to spend on AI data centers in 2025.
For context that nearly 100% more than 2024.
And get this … Amazon, Google, Meta, Oracle, Elon Musk are going to spend even more too!
Do you know what this means?
The AI race isn’t slowing down at all.
In fact, it’s accelerating.
This is going to be an absolute gold rush.
Look … I could package this up into some marketing webinar and sell you on a service, but there’s no time for that. I just want you to take this information and make money.
Let’s get into it …
Today You Will Get:
Timeline of spending from the major cloud players
Outline the must own semiconductor stocks
A few smaller semiconductor stocks to buy
If you don’t like individual stocks - I’ve got an ETF for you
Semiconductor stocks have had a helluva ride over the past year.
Just your broad based semiconductor ETF is up 72% over the past 2 years.
As a side note, if you want to play the semiconductor industry with an ETF, the SMH 0.00%↑ is a good option (spoiler alert) because its top 3 holdings are 3 of the companies I will recommend below.
So it’s a good way to play the strategy I’ll outline below inside an ETF if that’s your preference.
Now, I understand there will be some of you that will look at the outperformance of the semiconductor group and feel like you’re getting in too late … or that you’ve missed the boat.
I’m here to tell you this ship hasn’t even boarded yet … so there’s plenty of time.
That’s because of the news we got over the weekend.
Microsoft posted on a blog that it will be spending $80,000,000,000 in 2025 on AI.
That’s a massive acceleration over the $44B it spent last year.
Not to be outdone will be Amazon AMZN 0.00%↑
Amazon’s AWS division had a massive lead in the cloud computing race. In fact, AWS was basically the go-to platform for cloud up until a few years ago.
Google and especially Microsoft have quickly gained ground with AI applications. You’ve also got several startup AI cloud providers … more on them later.
While we don’t have any official word from Amazon on what they will spend in 2025 yet … we can assume they’ll accelerate over the previous year.
That total for 2024 you ask? ….
$69.8B through 12 months ending in September!
Yeah, that’s right. With Microsoft saying they’ll spend $80B … I doubt Amazon wants to be outdone.
With Amazon pumping out over $112B in operating cash flow last year, the company could spend $100B on data centers in 2025 and still have positive free cash flow. (!!!!!!!)
Next is Google GOOG 0.00%↑ GOOGL 0.00%↑
Through 9 months the company spent $38.3B on CapEx. And the interesting thing is Google has even more leeway financially than both Microsoft and Amazon given it’s massive cash position.
It’s also Google who has the most to lose if it doesn’t win a good chunk of the AI race.
Don’t be surprised if Google pulls a Microsoft and commits a number in the $80B range.
We’ll get a clearer picture of how much these companies are going to spend in a few weeks when they report earnings … but only the uninformed investor is going to wait.
For fun, let’s throw in Meta. They are spending massive amounts on AI as well.
The company has projected spending $38-$40B in 2024 and said this on their last conference call:
We continue to expect significant capital expenditures growth in 2025. Given this, along with the back-end weighted nature of our 2024 capital expenditures, we expect a significant acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet.
Meta CFO
The crazy part is I could keep going. Oracle ORCL 0.00%↑ had an incredibly bullish conference call describing demand outpacing their ability to deliver.
Let’s also not forget the smaller cloud providers as well. With the big boys like Microsoft, Amazon, and Google overwhelmed with demand - many startups are turning to startup cloud providers because they can get access to the high-end Nvidia GPUs right away.
We wrote about one a few weeks ago, read up on it here:
Okay … so let’s recap.
Here’s the confirmed and estimated data center spending from the majors over the next 12 months:
Microsoft $80B (confirmed)
Amazon $90B (est)
Google $80B (est)
Meta $60B (est)
That’s $310,000,000,000 for those keeping score at home.
Not over the next 12 years.
That’s over the next 12 months!!!!!!!!
Even more crazy is these companies can afford it. I think it’s highly likely each company pulls back on buying back stock and instead doubles down on CapEx.
This all brings me back to something I wrote about in October here on the Newsletter.
Nvidia’s revenue estimates for a megacap company were so wide it made Lizzo look skinny.
My assumption back in October was that Nvidia would come towards the high-end estimates - meaning the stock would continue to go higher.
That’s all more or less confirmed now with Microsoft throwing down the $80B number.
It’s only a matter of time before Wall Street catches up.
Good news for you, Wall Street is incredibly slow to react.
Just look at Q4 2026 which for Nvidia covers the November, December, January time frame.
One Wall Street analyst projects $31.13B and another is at $100.87B (!!!!!!!!!!!!)
It doesn’t take a genius to know what is more likely after Microsoft (Nvidia’s largest customer) said they were spending nearly 100% more on data centers in 2025.
Also keep in mind that Nvidia’s sales in 2025 will be much stronger in the back half when the Blackwell GPU is in full production.
In fact, Nvidia “only” guided to $37.5B in revenue for Q4 … meaning a ton of spending will occur in the Spring/Summer/Fall timeframe.
Okay … so now the million dollar question.
Or in this case, the $300B question.
Where is the $300B+ in data center spending from the majors going to flow?
Three companies will absorb the bulk of the 2025 spending because they are already in production with market dominating products.
Nvidia (obviously)
Broadcom AVGO 0.00%↑
This company has a premier networking product that can be paired with NVIDIA GPUs if the customer doesn’t want to use Nvidia’s proprietary offering. Broadcom also makes custom silicon for Google and confirmed several other major players were going to spend billions with them in the coming years.
I posted a video on how I believe Broadcom stock will 3x from here, watch the video for full details:
Taiwan Semiconductor TSM 0.00%↑ as the only manufacturer with the scale to deliver these chips in volume, they obviously benefit.
This wraps me back to the VanEck Semiconductor ETF SMH 0.00%↑ - the top 3 holdings representing over 40% of the portfolio are Nvidia, Broadcom, and TSM.
If you don’t have exposure to all 3 of these semiconductor stocks you’ll want to build a position during Q1. The ETF is a fine choice if you don’t want to worry about individual stock risk.
After that is a LONG list of companies that stand to benefit.
I’ve covered two of the smaller ones in this video back in November:
The rest I do want to save for our new paid service launching very soon.
Unfortunately YouTube videos pays almost nothing and the type of information that we provide is very valuable.
Here’s just one satisfied customer here:
VRT and CRDO were muti-baggers in less than 12 months.
That can change your life.
We’re currently building out the website getting ready to launch shortly. One thing I do ask is if you have a testimonial, or if I’ve helped you make money in the past and you’d like it to be featured on our site I’d appreciate if you could pass that along to the email below.
colin@colintedards.com
In the meantime I’m in Las Vegas for the Consumer Electronics Show. Follow me on social media as I’ll be posting photos and videos all week.
See you next time,
Colin
— Follow Me On Twitter: https://x.com/InvestorVideos
— Follow Me On Instagram: https://www.instagram.com/investorvideos/
— Follow Me On TikTok: https://www.tiktok.com/@equityempireresearch