Stocks have bounced back after escalating tariffs and rising geopolitical concerns have given way to hope for a more stable global trade environment. Technology names were some of the hardest hit with the tech-heavy Nasdaq Composite falling as much as 24% from recent highs.
Sector-specific concerns also hurt recent winners like artificial intelligence (AI) leader Nvidia (NVDA 0.28%) and AI server provider Dell Technologies (DELL 3.08%). The fears about declining investments to build AI infrastructure may have been premature, though. The result could be a surge in stocks like Nvidia, Dell, and another under-the-radar AI play as the year progresses.
Image source: Nvidia.
AI investments grow
Optimism is spreading as President Donald Trump has already rolled back some tariffs previously announced, including slashing tariffs on China from 145% to 30% for at least a 90-day negotiating period. That optimism should help companies continue to commit capital to build AI infrastructure.
Some big tech names have already said they expect to maintain or even grow investments this year. One insider who believes data center usage will continue to grow is Blackstone president and chief operating officer Jonathan Gray. That private equity company has a unique perspective as it invests in a diverse range of technology companies.
Gray stated: “I think this trend is powerful. I think it will continue,” commenting on data center investments in a recent CNBC interview. He added that, “overall, we still see a ton of demand.”
Much of that demand is for Nvidia’s advanced chips and AI software stacks. That view was reinforced when Nvidia announced a new major customer in Saudi Arabia. Humain, a newly launched Saudi Arabian AI company owned by the kingdom’s sovereign wealth fund, plans to buy 18,000 of Nvidia’s latest Blackwell chips along with Nvidia networking and the Omniverse cloud platform.
That’s just the first phase of a projected 500 megawatt-capacity data center powered by hundreds of thousands of Nvidia GPUs over the next five years. That’s just the latest example of Nvidia’s long runway for growth.
Benefiting along with Nvidia
Orders such as that will also boost the future earnings of server providers like Dell Technologies. Dell isn’t a pure AI play as it also sells personal computers, traditional servers, and provides a wide variety of technology products and services.
Its growth driver, though, is from its AI-optimized server shipments. Those sales exploded to $2.1 billion in the latest quarter from $800 million in the year-ago period. Dell said it had a $4.1 billion AI backlog exiting the fiscal 2025 fourth quarter ended Jan. 31.
Dell is also returning capital to shareholders. It boosted its annual dividend by 18% in fiscal 2025 after a 20% increase in 2024. The current dividend represents a forward yield of nearly 2%, even after Dell shares have soared by more than 50% since early April. Its next quarterly earnings report is due on May 29, and investors might hear enough of an optimistic forecast from management to set the stock up for more gains in the back half of 2025.
Sharing the wealth with shareholders
CuriosityStream (CURI 8.09%) isn’t as well known to investors. As of this writing, it is still a small-cap company with a market capitalization of about $320 million.
Investors might wonder how a media and entertainment company like CuriosityStream could be an AI stock. The company was founded by John Hendricks, who also created and led The Discovery Channel‘s parent. CuriosityStream’s mission is similar to that more well-known documentary cable channel: “To satisfy humanity’s enduring curiosity about our world with premium factual content that informs, enchants, and inspires.”
Yet it has a catalog of factual content that is not just desired by consumers for entertainment, but also in high demand for AI large language model (LLM) training. The licensing revenue for CuriosityStream’s content is now the growth story.
Revenue growth prospects were good enough for management to initiate a dividend last year. It has since raised that payout several times and announced a one-time special dividend after reporting its first net profit in the first quarter. The balance sheet had $39 million in cash and equivalents along with no debt as of March 31, allowing CuriosityStream to deliver excess cash back to shareholders.
Management sees revenue continuing to increase in the second quarter with the midpoint of guidance implying 33% year-over-year growth. Adjusted free cash flow should also keep rising, allowing it to continue sharing leftover cash after investing in the business with shareholders. Its forward dividend yield was a healthy 5.7% at its recent price of $5.62 per share, not including the one-time payout coming in June.
Each of these three stocks is benefiting greatly from rising AI spending. Nvidia may be the least risky of the three with so much business seemingly locked in for months and years to come. Investors have more recently caught on to CuriosityStream’s story. Shares have doubled in just the last month. Some of its AI-related gains are already built in. But more risk-tolerant investors might still see it as an intriguing growth story as it should report increasing licensing revenue growth through the back half of the year.
Howard Smith has positions in CuriosityStream, Dell Technologies, and Nvidia. The Motley Fool has positions in and recommends Blackstone and Nvidia. The Motley Fool has a disclosure policy.
