There’s a lot of uncertainty in today’s stock market. But it’s times like these when investors who are willing to be opportunistic can find chances to earn the best returns.
As the rise of artificial intelligence (AI) creates doubt over the outlook for software companies and AI infrastructure firms, I think the stock market is a great place to invest. So here’s what I’m doing.
The stock market has changed its mind several times about which businesses are going to be the AI winners. But one industry that has fared very well is semiconductors.
Companies like Micron that supply things that go into data centres – in this case, memory chips – have seen demand surge. And supply hasn’t been able to keep up.
As a result, prices have increased and this means revenue growth has been accompanied by margin expansion. So profits have surged and share prices have rocketed as well.
The trouble is, that same dynamic – inelastic supply that can’t react to changes in real time – is going to prove a problem if (or when) demand ever falls. And that’s the big risk.
It’s not just hypothetical. The stock market seems genuinely concerned about the risk of data centre overbuilding and it’s been expressing this in falling share prices for big tech companies.
That, though, is where I think there’s an opportunity. The market is worried about one side of the AI infrastructure boom but not the other – and that’s where I’m looking for opportunities.
Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) saw their share prices fall in response to their latest earnings reports. And the general theme was very similar.
Both companies announced significant plans to invest in AI data centres in 2026. In each case, the proposed spending is around five times the revenue of their cloud businesses in Q4 2025.
The market is concerned about the risk of oversupply, which is fair enough. But it isn’t expressing the same worry about the companies making the equipment that goes into these data centres.
Given this, I think Amazon and Microsoft both look like relatively attractive opportunities, which is why I’ve been buying both recently. And there’s something else to pay attention to on this front.
Both companies have significant investments in some of the leading AI labs. Microsoft owns 27% of OpenAI and Amazon owns around 20% of Anthropic.
I’m not convinced the market is fully reflecting the value of these investments in the share prices of the big tech companies. And that’s another reason for thinking there might be an opportunity.
I think whether or not the stock market is in an AI bubble depends on which bit you look at. Shares in semiconductor companies are trading at levels that look ambitious to me right now.
