AI Infrastructure Supercycle: AMD and Palantir Positioned for Long-Term Gains
Key Takeaways
- As global AI spending is projected to hit $2.5 trillion in 2026, AMD and Palantir are emerging as high-conviction plays for investors looking to capitalize on infrastructure and software scaling.
- Despite recent volatility in AMD's share price following conservative guidance, the underlying growth in EPYC server adoption and the upcoming MI450 GPU launch suggest a robust long-term trajectory.
Mentioned
Key Intelligence
Key Facts
- 1Gartner forecasts global AI spending to reach $2.5 trillion in 2026, a 44% year-over-year increase.
- 2AMD reported Q4 2025 revenue of $10.3 billion, up 34% from the previous year.
- 3AMD's free cash flow grew by 91% to $2.1 billion in the final quarter of 2025.
- 4Public cloud instances powered by AMD EPYC processors increased by 50% YoY to nearly 1,600.
- 5AMD's Instinct GPUs are currently utilized by 80% of the top 10 global AI companies.
- 6AMD's stock fell 13% post-earnings due to Q1 guidance of $9.8 billion, creating a potential value entry point.
Analysis
The global technology sector is currently navigating a pivotal transition from the experimental phase of generative AI to a massive, multi-year infrastructure build-out. According to recent data from Gartner, global spending on artificial intelligence is forecast to reach $2.5 trillion in 2026, a staggering 44% increase year-over-year. This surge is primarily driven by enterprises and hyperscalers racing to deploy generative AI at scale, creating a fertile environment for companies that provide the underlying hardware and the software layers necessary to operationalize these models. Among the leaders in this space, Advanced Micro Devices (AMD) and Palantir Technologies are increasingly viewed as strategic long-term holdings for investors seeking exposure to this supercycle.
Advanced Micro Devices recently reported a strong fiscal 2025 fourth quarter, with revenue climbing 34% to $10.3 billion and free cash flow soaring 91% to $2.1 billion. Despite these robust figures, the stock experienced a sharp 13% correction following the report. The market's reaction was largely tied to the company's fiscal first-quarter revenue guidance of approximately $9.8 billion, which fell short of some analysts' more aggressive expectations for a faster ramp-up in AI GPU sales. However, this pullback may represent a significant entry point for long-term investors. The underlying fundamentals of AMD’s data center business remain exceptionally strong; EPYC server instances in the public cloud grew by more than 50% year-over-year, reaching nearly 1,600 instances by the end of 2025. This dominance in the CPU market provides a stable foundation as the company pivots toward the high-margin GPU market.
Advanced Micro Devices recently reported a strong fiscal 2025 fourth quarter, with revenue climbing 34% to $10.3 billion and free cash flow soaring 91% to $2.1 billion.
The next phase of AMD's growth is centered on the MI450 Instinct GPUs and the Helios rack-scale solutions. By integrating CPUs, GPUs, and networking into a unified server system, AMD is positioning itself as a direct competitor to integrated solutions from Nvidia. Currently, AMD’s Instinct GPUs are already utilized by eight of the top ten global AI companies, signaling deep market penetration. As hyperscalers continue to diversify their hardware providers to mitigate supply chain risks and optimize costs, AMD’s MI450 is expected to capture a larger share of the training and inference market, particularly as enterprises upgrade legacy data centers to support modern AI workloads.
What to Watch
Complementing the hardware narrative is Palantir Technologies, which serves as the critical software layer in the AI stack. While hardware provides the raw compute power, Palantir’s platforms—specifically its Artificial Intelligence Platform (AIP)—enable organizations to translate that power into actionable business intelligence. Palantir has successfully transitioned from a government-focused contractor to a commercial powerhouse, helping companies integrate generative AI into their core operations. The synergy between hardware providers like AMD and software integrators like Palantir is the defining characteristic of the current market cycle. As businesses move past the 'proof of concept' stage, the demand for Palantir’s ability to manage complex data environments and ensure AI safety and reliability is expected to grow in tandem with infrastructure spending.
Looking ahead, the primary risk for these 'unstoppable' tech stocks remains the timing of the AI ROI (return on investment) for end-users. If enterprises do not see immediate productivity gains from their massive capital expenditures, there could be a temporary cooling in infrastructure demand. However, the current trajectory of cloud provider capital expenditure and the rapid evolution of large language models suggest that the infrastructure build-out is still in its early-to-middle innings. For investors with a long-term horizon, the recent volatility in AMD and the steady expansion of Palantir’s commercial footprint offer a compelling case for building positions in the architects of the AI era.
Sources
Sources
Based on 2 source articles- fool.com2 Unstoppable Tech Stocks to Buy Right Now for Less Than $1 , 000Feb 26, 2026
- CFA (us)2 Unstoppable Tech Stocks to Buy Right Now for Less Than $1,000Feb 26, 2026