3 AI Infrastructure Stocks to Watch as the Santa Claus Rally Meets a Surge in AI Demand

The AI revolution is accelerating, with hyperscalers like Microsoft and Amazon pouring over $400 billion into infrastructure in 2025 alone according to a Nasdaq report. Yet, as the tech sector's volatility persists, investors are increasingly seeking exposure to AI's growth while mitigating risk. The answer lies in physical infrastructure-companies that supply the tangible assets enabling AI's expansion. These firms, from rare earth miners to data center builders, offer a dual advantage: participation in AI's upside and a buffer against the sector's inherent instability. Here are three stocks to watch as the Santa Claus Rally collides with AI's infrastructure boom.

1. MP Materials (MP): Powering AI's Rare Earth Supply Chain

MP Materials has emerged as a critical player in the rare earth supply chain, a sector often overlooked but indispensable for AI hardware. The company's strategic pivot from selling raw concentrates to producing high-value neodymium-praseodymium (NdPr) oxide has positioned it to capitalize on AI's demand for permanent magnets in servers and cooling systems according to Chartmill.

In Q3 2025, MP Materials reported record NdPr production of 721 metric tons, a 51% year-over-year increase. While revenue dipped 15% to $53.6 million due to the cessation of concentrate sales, the Magnetics segment generated $21.9 million in revenue and $9.5 million in adjusted EBITDA. This shift reflects a deliberate strategy to align with U.S. government priorities, including a $40 million prepayment from Apple and a long-term price protection agreement with the Department of Defense.

MP's future looks even brighter. A new heavy rare earth separation facility is expected to produce 200+ metric tons of dysprosium and terbium annually by mid-2026, further diversifying its offerings. With AI infrastructure requiring stable, high-grade materials, MP's government-backed contracts and vertical integration strategy make it a compelling hedge against tech sector swings.

2. Sanmina Corp (SANM): Building the Hardware Behind AI's Expansion

Sanmina Corp, a contract manufacturer of servers and data center components, is a linchpin in the physical infrastructure layer of AI. Its recent acquisition of ZT Systems from AMD has amplified its role in AI's supply chain.

Sanmina's stock has surged 85% year-to-date in 2025, outperforming the S&P 500 Tech sector. This momentum is driven by strong earnings surprises and strategic positioning. In Q4 2025, the company exceeded revenue estimates by 2.26% and beat EPS forecasts by 6.37%. Analysts at BofA have raised their price target to $180, citing Sanmina's partnerships with hyperscalers and its potential to double revenue within three years.

3. Dycom Industries (DY): Fiber-Optic Networks as AI's Arteries

Dycom Industries, a leader in fiber-optic network installation, is capitalizing on the surge in data traffic driven by AI applications. Its stock has gained 84.8% year-to-date in 2025, reflecting robust demand for high-bandwidth infrastructure.

Q3 2025 results underscore Dycom's strength: revenue rose 14.1% year-over-year to $1.45 billion, with adjusted EBITDA margins expanding to 15.1%. The company's $8.22 billion backlog, including $4.99 billion expected to be completed within 12 months, is fueled by long-term contracts with hyperscalers and a projected $20 billion in U.S. data center network spending over the next five years.

Dycom's diversification strategy further insulates it from tech sector volatility. By expanding into federal broadband programs and reducing reliance on its largest telecom clients, the company is building a more resilient revenue base. Its recent board addition of Stephen LeClair-a former executive at Lumen Technologies-signals a focus on scaling infrastructure services. As AI applications generate unprecedented data flows, Dycom's fiber-optic networks will remain a non-negotiable component of the ecosystem.

Conclusion: Infrastructure as a Hedge in an AI-Driven World

As the Santa Claus Rally gains momentum, investors seeking stability amid tech sector swings should look to these infrastructure plays. They represent the bedrock of AI's future-and a path to balanced growth in an increasingly digital world.