As artificial intelligence (AI) continues to revolutionize industries, the need for a robust AI infrastructure is crucial to realizing its full potential. The global AI infrastructure market is poised for explosive growth, projected to grow at a staggering compound annual growth rate (CAGR) of 30.4% from 2024 to 2030.
Moreover, in a recent bullish note, Oppenheimer analyst Timothy Horan highlighted that fierce competition among hyperscalers to build cutting-edge AI models is creating an AI infrastructure shortage, boosting capital expenditures and fueling robust cloud growth.As enterprises pivot away from outdated IT, they are investing in comprehensive hyperscale bundles that integrate advanced cybersecurity and networking capabilities.
With earnings season in full swing, Horan said of Microsoft: 
MSFTCloudflare, Inc. 
NetC3.ai 
artificial intelligence These companies were selected as “top picks” in the evolution of AI infrastructure because, according to analysts, they are poised to benefit as businesses increase their cloud migration and spending on AI technologies. Here, we take a closer look at these three companies.
Brand 1: Microsoft
Microsoft, headquartered in Washington, boasts a staggering market capitalization of approximately $3.2 trillion. MSFT Microsoft is a major force in technology. Known for powerful products like Microsoft Office and Teams, the company is now powering its forces with AI. Microsoft is embedding cutting-edge AI in everything from Windows and Xbox to Microsoft 365 and Azure AI, powering billions of smart experiences every day.
Shares of the megacap stock have risen about 26% over the past 52 weeks, outpacing the S&P 500 index. 
Spocks Over the same period, it returned 19.5%.
With an illustrious history of increasing its dividend for 19 consecutive years, Microsoft is committed to maximizing shareholder value. In the third quarter, the tech giant generously provided investors with approximately $8.4 billion through share repurchases and dividends. On June 12, the company declared a quarterly dividend of $0.75 per share, payable to shareholders on September 12. The annualized dividend works out to $3.00 per share, with a dividend yield of 0.70%.
Microsoft reported third-quarter results on April 25, which beat Wall Street's revenue and profit expectations by a wide margin. The company's total revenue rose 17% year over year to $61.9 billion, slightly beating Wall Street's expectations. Microsoft's EPS soared 20% year over year to $2.94, beating expectations by 4.6%.
The company is scheduled to report its fourth-quarter results after the market closes on Tuesday, July 30. The company's guidance will also be closely watched, with Wall Street expecting GAAP earnings of $2.90 per share on revenue of $64.44 billion.
Analysts who track Microsoft expect the company's earnings to rise about 20% year-over-year to $11.77 a share in fiscal 2024 and another 11.9% to $13.17 a share in fiscal 2025.
Overall, MSFT shares have a “Strong Buy” consensus rating. Of the 38 analysts covering the stock, 34 recommend a “Strong Buy,” 3 suggest a “Moderate Buy,” and 1 has given the stock a “Hold” rating.
The average analyst price target is $501, suggesting a potential upside of 17.2% from current share prices levels, while the market high price target of $600 means MSFT shares could rise by up to 40.4%.
Brand #2: Cloudflare
California-based Cloudflare, Inc. has a market capitalization of approximately $26.3 billion. Net Cloudflare is revolutionizing the Internet with its leading connected cloud platform. By providing an integrated suite of cloud-native products and developer tools, we increase speed, security, and efficiency while reducing complexity and cost for organizations of any size. Leveraging one of the world's largest and most interconnected networks, Cloudflare protects clients from billions of online threats every day.
Cloudflare shares are up 16.3% over the past 52 weeks and down 6.5% so far in 2024.
On May 2, Cloudflare announced its first-quarter earnings results, which beat Wall Street expectations for both revenue and profit. The company posted total revenue of $378.6 million for the quarter, up 30% year over year. Adjusted earnings per share doubled year over year to $0.16, and free cash flow surged to $35.6 million from $13.9 million a year ago.
NET shares fell sharply after the earnings report as investors reacted to the company's conservative guidance, despite first-quarter results beating expectations. For the second quarter, due to be released this Thursday after the market closes on August 1, analysts are expecting adjusted earnings per share of $0.14 on revenue of $394.5 million.
Oppenheimer's Horan noted that Cloudflare has emerged as a cutting-edge platform and has high hopes for the guidance, predicting that NET will “outperform by 100 bps for the full year and raise guidance by 200 bps.”
Overall, the NET stock has received a Moderate Buy consensus rating. Out of the 29 analysts covering the stock, 8 recommend a Strong Buy, 2 suggest a Moderate Buy, 16 recommend a Hold, 1 suggest a Moderate Sell, and the remaining 2 give the stock a Strong Sell rating.
The average analyst price target is $90.33, suggesting a potential upside of 17.3% from current share prices levels, while the market-high price target is $135, suggesting NET shares could see upside of up to 75%.
Stock #3: C3.ai, Inc.
C3.ai, Inc. is headquartered in Redwood City, California. artificial intelligence is a leader in enterprise AI offering a comprehensive suite of integrated solutions. The company's C3 AI Platform provides a complete toolkit for creating and managing AI applications, while C3 AI Applications deliver industry-specific SaaS solutions that drive global digital transformation. The company's C3 Generative AI suite brings cutting-edge, domain-specific AI innovations to enterprises.
C3.ai, which has a market cap of $3.5 billion, has fallen about 31% over the past 52 weeks and is down 4.3% since the beginning of the year.
After the close of trading on May 29, C3.ai shares rose 19.4% in the next trading session after the company reported better-than-expected fourth-quarter results. Revenue of $86.6 million increased 20% year over year and beat Wall Street's expectations of $84.4 million. The strong sales performance was primarily driven by a 41% year over year increase in subscription revenue, which accounted for 92% of total revenue.
C3.ai also cut its adjusted loss per share to $0.11, beating expectations by 63.7%. C3.ai's financial position remains strong, with a large cash reserve of $750.4 million and positive free cash flow of $18.8 million as of April 30.
Commenting on the fourth quarter results, CEO Thomas M. Siebel said, “Demand for enterprise AI is growing, and our first-to-market advantage in the enterprise AI space positions us well to capitalize on that demand. Federal government revenues grew more than 100% for the year, and we're seeing incredible interest in our generative AI applications.”
Management expects total revenue of $84 million to $89 million for the first quarter of fiscal 2025. For the full year, total revenue is expected to be between $370 million and $395 million.
AI stock has an overall consensus rating of “Hold.” Out of the 14 analysts covering the stock, four recommend a “Strong Buy,” six suggest a “Hold,” two recommend a “Moderate Sell,” and the remaining two have maintained a “Strong Sell” rating.
The average analyst price target is $29.33, suggesting a potential upside of 8.1% from the stock's current levels, while the market-highest price target is $40, suggesting the stock could rise by up to 47.5%.
On the date of publication, Anushka Mukherji did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information please see Barchart's disclosure policy here.
