OpenAI Considers Offering Infrastructure Services to Other Companies, Potentially Creating New Business Segment

OpenAI is considering opening up its infrastructure for other companies to use, potentially creating a new business line that could help offset the costs of developing ChatGPT. The model would be similar to Amazon's cloud computing service, but the company is currently focused on securing enough computing power for its own operations. OpenAI has raised significant funds in recent years and is exploring alternative financing options, including a potential IPO.

The artificial intelligence (AI) revolution, bolstered by the rapid expansion of cloud computing and data centers, is poised to redefine the tech landscape. The demand for data center capacity has surged to manage and store the massive amounts of data generated by cloud computing. This bullish demand scenario supports a robust market for AI-focused data center and cloud infrastructure developers. According to Bloomberg Intelligence, the generative AI market is expected to grow to $1.3 trillion over the next decade, from a market size of $40 billion in 2022 [1].

Investors are advised to buy and hold three leading AI-powered data center and cloud infrastructure developers: Vertiv Holdings Co. (VRT), Arista Networks Inc. (ANET), and Astera Labs Inc. (ALAB). Each of these companies carries a strong investment grade, with VRT and ALAB both having a Zacks Rank of #1 (Strong Buy) [1].

Vertiv Holdings Co. (VRT)

Vertiv is a leading global provider of critical digital infrastructure and services for data centers, communication networks, and commercial and industrial environments. The company's portfolio includes power, cooling, and IT infrastructure solutions, particularly those enabled by AI. Vertiv is benefiting from an extensive product portfolio, which spans thermal systems, liquid cooling, UPS, switchgear, busbar, and modular solutions. The company reported a 35% sales growth and robust orders momentum, reflecting strong market demand and expanded capabilities to serve customers' increasingly complex infrastructure needs [1].

Vertiv's partnership with NVIDIA Corp. (NVDA) is a key catalyst, with the company aiming to stay one GPU generation ahead of NVIDIA to enable efficient, scalable power solutions for next-generation AI data centers. The company's rich partner base, which includes Ballard Power Systems Inc. (BLDP), Compass Datacenters, Intel Corp. (INTC), ZincFive, and Tecogen, further strengthens its position in the market [1].

Arista Networks Inc. (ANET)

Arista Networks specializes in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks. Arista's AI-focused strategy is underpinned by three guiding principles: best-in-class products, proactive resilience, and zero-touch automation with telemetry. The company's EOS Smart AI Suite and Arista AVA (Autonomous Virtual Assist) enhance AI job monitoring, deep-dive analytics, and proactive performance issue resolution, offering predictive client-to-cloud one-click operations with granular visibility and prescriptive insights [1].

Arista Networks' AI-powered cloud networking solutions provide predictable performance and programmability, enabling seamless integration with third-party applications for network management, automation, and orchestration. The company's modern networking platforms are foundational for transformation from silos to centers of data, setting it apart from competitors [1].

Astera Labs Inc. (ALAB)

Astera Labs is a developer of connectivity solutions for cloud computing and AI applications. Its key offerings include an Intelligent Connectivity Platform with both hardware (like chips and modules) and software (COSMOS) designed to enhance connectivity in AI and cloud environments. The company's full-stack portfolio spans PCIe 6.0, Ultra Accelerator (UA) Link for scale-up, Ethernet for scale-out, and CXL for memory, positioning it to gain from the AI Infrastructure 2.0 transition [1].

Astera Labs expects scale-up connectivity for rack-scale AI infrastructure alone to add close to $5 billion of market opportunity by 2030. The company is benefiting from strong demand for its Aries, Taurus, and Scorpio product families, with Scorpio revenues expected to account for more than 10% of total revenues in 2025 [1].

Conclusion

The AI-focused data center and cloud infrastructure market is poised for significant growth, driven by the increasing demand for data storage and processing. Investors are advised to consider Vertiv Holdings Co. (VRT), Arista Networks Inc. (ANET), and Astera Labs Inc. (ALAB) for long-term investment opportunities. These companies' strong product portfolios, strategic partnerships, and robust market demand positions them well for future growth.

References

[1] https://www.nasdaq.com/articles/buy-and-hold-3-ai-focused-data-center-cloud-infrastructure-developers