Alphabet Says Its AI Spending Will Keep Rising. 2 Data Center Stocks to Buy and Hold Through 2030.
Alphabet(NASDAQ:GOOGL)(NASDAQ:GOOG) spent $51.4 billion on capital projects in the third quarter of 2026 while it builds out its artificial intelligence infrastructure. That was more than double its spending a year before. And it isn't planning to slow down. With its Oct. 28 report, the Google parent kept its 2026 range of $195 billion to $205 billion and said it expects that spending to grow significantly in 2027.
To hit even the bottom of this year's range, Alphabet would have to spend around $63 billion in the fourth quarter alone. That would beat the third quarter's total by about $12 billion, after a rise of over $6 billion from the second quarter.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Microsoft(NASDAQ:MSFT), which reported the same day, spent $45.2 billion in its fiscal first quarter (the three months ending Sept. 30). That came in below the more than $50 billion it had guided for, because some capacity from third-party providers arrived late. But management expects spending to speed up in the second half of its fiscal year, mostly on central processing units (CPUs) and graphics processing units (GPUs) .
Yet two of the firms supplying these data centers trade far below their highs. As of this writing, Nvidia(NASDAQ:NVDA) is around 10% below its Oct. 6 record close, and Vertiv(NYSE:VRT) is about 35% below its May record close -- even after surging 16% on Oct. 28.
Image source: Getty Images.
1. Nvidia
Of course, a big part of this spending goes to chips like Nvidia's. Around three-quarters of Microsoft's capital spending last quarter went to short-lived assets, mostly CPUs and GPUs, up from about two-thirds the quarter before. And CEO Satya Nadella said Microsoft has docked its first Nvidia Vera Rubin GPUs.
Nvidia's revenue surged 106% year over year to $96.2 billion for its fiscal 2027 second quarter, which ended July 26. Management guided for fiscal third-quarter revenue of around $108 billion, which would be about 89% above the year-ago period.
Sequential growth is slowing, though. It's come down from 22% in fiscal Q3 2026 to 20%, 20%, and 18% since, and the new outlook works out to about 12%.
In other words, Nvidia is still growing fast, just not as fast as before. But for a long-term shareholder, I think the more important trend is that customers keep upping their budgets, and Alphabet just said it plans to again in 2027.
Yes, Nvidia faces competition. Google Cloud's revenue climbed 103% last quarter, and Alphabet CEO Sundar Pichai pointed to strong demand for the company's own tensor processing unit (TPU) systems from a broad range of customers. But with Alphabet's spending set to rise significantly again, there's arguably room for both.
2. Vertiv
Vertiv, which provides the power and cooling gear data centers need, just reported its fastest growth this year.
Showing how sharply demand picked up, Vertiv's third-quarter net sales surged 61% year over year to $4.3 billion. Organic growth (which leaves out acquisitions and currency moves) accelerated to 55%, around triple the second quarter's 18% pace. Its non-GAAP (adjusted) operating margin has widened every quarter this year, from 20.8% to 22.6% to 25.2%. Adjusted earnings per share climbed 78% to $2.21.
Plus, organic orders more than doubled year over year, management said on the earnings call. But it also said it won't report orders data from now on, so investors will have less to go on.
Management lifted its 2026 forecast again, too. It now sees adjusted earnings per share of around $7.15 at the midpoint, up from $6.02 in February, and organic sales growth well above the market's in 2027.
Still, the stock can swing hard. Shares dropped 17% on July 29, when Vertiv posted 24% second-quarter sales growth and said temporary supply chain congestion had held sales back a bit.
Which is the better buy now?
Both companies get paid by the same build-out. The key difference is price.
Analysts, on average, expect Nvidia to earn about $15.90 a share in fiscal 2028 (the year ending January 2028). With shares near $215, that's about 14 times earnings. Vertiv, at roughly $243, trades at about 26 times what analysts expect it to earn in 2027 -- almost double Nvidia's price-to-earnings multiple, for a business that will stop reporting its orders.
In the end, I'd be glad to hold both stocks through 2030. If I could start with just one, I'd consider Nvidia first, as investors pay far less for every dollar of its expected earnings. With Vertiv, I'd likely begin with a smaller position.
Should you buy stock in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflixmade this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $334,793!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,257,420!*
Now, it's worth noting Stock Advisor's total average return is 874% — a market-crushing outperformance compared to 209% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of November 1, 2026.
Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, Nvidia, and Vertiv. The Motley Fool has a disclosure policy .
Alphabet Says Its AI Spending Will Keep Rising. 2 Data Center Stocks to Buy and Hold Through 2030. was originally published by The Motley Fool
