The artificial intelligence (AI)-driven marvelous bull story of U.S. stock markets for the past three and a half years is showing no sign of abatement. The four major U.S. hyperscalers raised their AI capital expenditure budget to $750 billion in 2026. This figure is set to cross $1 trillion next year and is likely to rise further beyond 2027.
As a result, AI infrastructure stocks are flourishing on Wall Street with more vigor. Here, we have identified three AI infrastructure giants (market capital >$50 billion) with a top Zacks rank for investment. These stocks boast a strong short-term price upside. Moreover, they have a solid long-term (3-5 years) earnings per share (EPS) growth rate, which will ensure a long-term northbound journey.
The companies are: Dell Technologies Inc. DELL, Monolithic Power Systems Inc. MPWR and Hewlett Packard Enterprise Co. HPE. Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our three picks year to date.
Image Source: Zacks Investment Research
Dell Technologies Inc.
Dell Technologies has been benefiting from astonishing server sales powered by AI chips. The massive growth potential of the global AI-optimized server market is noteworthy. In May 2026, FORTUNE BUSINESS INSIGHTS estimated that “the global AI server market size was valued at $194.62 billion in 2025. The market is projected to grow from $262.22 billion in 2026 to $2,847.32 billion by 2034, exhibiting a CAGR of 34.73% during the forecast period.”
Innovative Products
Dell Technologies is benefiting from strong demand for AI-optimized servers driven by the ongoing digital transformation and heightened interest in generative AI applications. Its PowerEdge XE9680 AI-optimized server is much in demand.
DELL’s advanced AI-optimized servers, including the PowerEdge XE9780 and 9780L platforms supporting up to 256 NVIDIA HGX B300 GPUs per rack, the XE9712 with NVIDIA GB300 NVL72, and the XE7745 supporting NVIDIA RTX Pro 6000 Blackwell GPUs, are noteworthy.
In fiscal fourth-quarter 2026, DELL launched the PowerEdge XE9712 supporting NVIDIA's NVL72 GB200. It launched the Dell Infrastructure Rack Sobel system, IR7000 and 5000 in both 21-inch and 19-inch versions, providing up to 96 GPUs in a rack and 786 GPUs in a scalable unit. The strong demand trend bodes well for the company’s long-term prospects.
Solid Long-Term EPS Growth Rate
Dell Technology has an expected revenue and earnings growth rate of 47.4% and 81.2%, for the current year (ending January 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 42.2% over the last 30 days. DELL currently has a long-term EPS growth rate of 26.4%, well above the S&P 500’s long-term EPS growth rate of 17.6%.
Image Source: Zacks Investment Research
Reasonable Valuation
Despite a robust rally this year, the DELL stock still looks reasonably priced. It trades at a forward 12-month price-to-earnings (P/E) multiple of 22.40, in line with the industry average. It also trades at a price/sales (P/S) multiple of 2.03, in line with the industry average.
Strong Short-Term Price Upside
The short-term average price target of brokerage firms represents an increase of 12.3% from the last closing price of $427.78. The brokerage target price is currently in the range of $290-$700. This indicates a maximum upside of 63.6% and a maximum downside of 32.2%. The risk/reward ratio is 1:2.
Monolithic Power Systems Inc.
Monolithic Power Systems continues to benefit from rising demand for power management solutions tied to AI infrastructure and cloud computing deployments. MPWR continues to broaden its addressable market through targeted technology acquisitions and product portfolio expansion.
AI Infrastructure Momentum
First-quarter 2026 Enterprise Data revenues increased 97.7% year over year and 12.6% sequentially due to higher sales for AI and server applications. MPWR raised its Enterprise Data growth floor expectation to nearly 85% year over year from prior expectations of roughly 50%.
Automotive remains a long-term growth driver as semiconductor content rises across ADAS, infotainment and connectivity applications. Beyond automotive, MPWR is broadening its exposure to robotics, building automation and portable AI devices.
MPWR highlighted that its monolithic power architecture enables single-piece silicon solutions versus multi-chip competitor approaches in AI and high-density applications. The company also expanded manufacturing goals beyond its prior $4 billion capacity target and now aims to reach $6 billion of capacity in the near future.
Solid Long-Term EPS Growth Rate
Monolithic Power Systems has an expected revenue and earnings growth rate of 32.8% and 35.3%, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 11.1% over the last 60 days. MPWR currently has a long-term EPS growth rate of 27.8%, well above the S&P 500’s long-term EPS growth rate of 17.6%.
Image Source: Zacks Investment Research
Reasonable Valuation
Despite an impressive northward journey this year, the MPWR stock still looks reasonably priced. It trades at a forward 12-month price-to-earnings (P/E) multiple of 63.94, in line with the industry average.
Strong Short-Term Price upside
The short-term average price target of brokerage firms represents an increase of 27.4% from the last closing price of $1,423.76. The brokerage target price is currently in the range of $1,575-$2,000. This indicates a maximum upside of 40.5% and no downside. The risk/reward ratio is extremely favorable.
Hewlett Packard Enterprise Co.
Hewlett Packard Enterprise is executing well on its mix shift toward higher-value networking, cloud and AI, supported by the Juniper acquisition, integration running ahead of plan and Catalyst cost synergies. Customer spend on AI inferencing, private cloud and network modernization is driving record orders and backlog, with improved HPE’s profitability and higher free cash flow.
Impressive Business Execution
HPE continues to simplify the portfolio and concentrate investment behind markets tied to networking, cloud and AI, which management views as long-duration drivers of enterprise technology spend.
The fiscal 2026 segment realignment, which combined Server, Hybrid Cloud and Financial Services into Cloud & AI, is intended to sharpen accountability around integrated solutions and consumption models.
HPE launched new autonomous, agentic AI operations capabilities and raised its cumulative Networks for AI order target to at least $2 billion by the end of fiscal 2026, reflecting confidence in AI-driven demand for high-performance networking.
HPE is expanding its enterprise AI offerings to make it easier for customers to develop, fine-tune and deploy models across data centers, edge environments and public clouds. The company continues to build turnkey AI factory solutions and Private Cloud AI offerings co-engineered with NVIDIA, aimed at accelerating time to value for inferencing, retrieval augmented generation and model tuning.
Solid Long-Term EPS Growth Rate
Hewlett Packard Enterprise has an expected revenue and earnings growth rate of 31.3% and 75.8%, for the current year (ending October 2026). The Zacks Consensus Estimate for the current year’s earnings has improved 40.9% over the last 30 days. HPE currently has a long-term EPS growth rate of 32%, significantly above the S&P 500’s long-term EPS growth rate of 17.6%.
Image Source: Zacks Investment Research
Attractive Valuation
Despite a year-to-date rally, the HPE stock still looks lucrative. It trades at a forward 12-month price-to-earnings (P/E) multiple of 14.20, almost half the industry average of 28.00. It trades at a price/sales (P/S) multiple of 1.65, well below the industry average of 9.11. It also trades at a price/book (P/B) multiple of 2.53, lower than the industry average of 7.17.
Huge Short-Term Price upside
The short-term average price target of brokerage firms represents an increase of 40.3% from the last closing price of $48.92. The brokerage target price is currently in the range of $52-$80. This indicates a maximum upside of 63.5% and no downside. The risk/reward ratio is extremely favorable.
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Monolithic Power Systems, Inc. (MPWR) : Free Stock Analysis Report
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
