3 stocks to watch in the AI ​​and space infrastructure rack

SpaceX’s record $75 billion IPO and debut valuation of over $2 trillion grabbed headlines, but the real story for you is how this wave of enthusiasm for AI and space-related technologies will ripple through to other stocks. Risk appetite appears to be very strong in this corner of the market, with shares soaring nearly 20% on the first day and trading worth more than US$80 billion. In this article, we highlight three stocks from our AI and space technology screener that we believe are particularly exposed to this change in focus. This will help you decide which ideas are noteworthy and worth putting on your watchlist.

Wall Street is lining up for a rocket. While SpaceX is counting down to its IPO, other companies involved in the new space race are already on track. → Watchlist of 20 Attractive Space Companies · Screen investment ideas for the global space race · Scan sectors by rating on the Rocket Lab ratings page.

Extreme Networks (EXTR)

overview: Extreme Networks provides an AI-powered cloud networking platform that enables enterprises and governments to manage, secure, and automate wired and wireless networks across campuses, data centers, and remote sites.

operation: The company generates approximately US$1.25 billion in revenue from the development and marketing of network infrastructure equipment and related software, with sales spread across APAC, EMEA, the United States, and the rest of the Americas.

Market capitalization: $4.1 billion

Extreme Networks sits at the intersection of AI and critical network infrastructure. This is becoming increasingly important as data-intensive applications such as space and satellite services rely on reliable and secure connections. The company is focused on AI through its Platform ONE and Agent ONE products and aims to grow software and subscription recurring revenue while supporting large customers such as governments and global enterprises. At the same time, investors must weigh significant leverage, recent non-recurring losses of US$35 million, and continued competition from much larger networking vendors. Extreme Networks may be attractive to investors who want to investigate AI infrastructure companies with recurring revenue streams and real-world deployments and evaluate how these strengths and risks fit with their company’s goals and risk tolerance.

Extreme Networks’ AI push and global customer base may be stronger than the headline numbers suggest, but the leverage and US$35 million loss are significant. Weigh the upside and pressure points in 3 major rewards and 2 key warning signs

Lumentum Holdings (LITE)

overview: Lumentum designs and manufactures laser and optical components that move data within cloud and AI data centers and power precision manufacturing tools in industries such as semiconductors, solar power, displays, and electric vehicles. The company’s products are integrated into equipment used by major cloud operators, network gear manufacturers, and industrial manufacturers who require fast, reliable data links and high-performance lasers.

operation: Reflecting a globally diversified sales base, Lumentum generates hundreds of millions of US dollars in revenue from customers across Japan, Mexico, Thailand, Hong Kong, the United States, the rest of the Americas, other Asia-Pacific markets, and EMEA.

Market capitalization: $69.2 billion

Lumentum operates at the intersection of AI and space themes, providing high-end photonic components that help move data between GPU clusters on Earth and support satellite communications in orbit. This position has gained further attention following SpaceX’s IPO and renewed focus on AI-driven space infrastructure. Recent results include increased revenue and profits, with Nvidia committing US$2 billion to the company and broader photonics ecosystem, and analysts revising targets in response to demand for AI data centers and adoption of co-packaged optics. At the same time, the stock trades at a relatively high valuation, indicating heavy reliance on outside funding, insider sales, and a volatile record of earnings, factors that make execution and future cash generation key considerations for anyone evaluating the stock.

AI and space-fueled demand could be exciting for Lumentum, but the combination of high valuation, capital needs, and earnings volatility isn’t straightforward, so it’s worth checking out 4 key rewards and 2 important warning signs.

Cerebras System (CBRS)

overview: Cerebras Systems builds and sells AI computing racks for data centers and supercomputers centered on wafer-scale engine chips designed to handle heavy workloads of generative AI, inference, and other advanced AI tasks faster than traditional GPUs. Its customers range from hyperscalers and AI labs to enterprises and sovereign AI projects in the U.S. and international markets.

operation: Cerebras generates approximately US$510 million in revenue primarily from semiconductors, with approximately US$188 million from the United States, US$322 million from Europe, the Middle East, and Africa, and smaller contributions from other regions.

Market capitalization: $49.8 billion

Cerebras sits at the intersection of AI infrastructure and technologies that can support AI-driven broadband and satellite communications, an area currently receiving increased attention from investors following SpaceX’s IPO. The company just returned to profitability and is reporting increased revenue and revenue, supported by its wafer-scale engine, partnerships with groups like AWS and OpenAI, and a growing backlog of multi-year AI inference contracts. At the same time, their balance sheets are capital negative, dependent on risky borrowings and liquid equity, and aggressive, making financing and execution key monitoring points. For investors considering AI and space technology together, Cerebras presents a combination of growth characteristics and balance sheet risk that may warrant further study.

Cerebras’ wafer-scale engine and emerging profitability may be masking a larger story about AI infrastructure growth and balance sheet risk, and that tension is evident in 4 key rewards and 2 key warning signs (1 is major!).

These three stocks are just a starting point. A complete artificial intelligence and space-focused screener reveals an additional 40 companies with equally compelling stories in data infrastructure, satellite connectivity, aerospace hardware, and robotics. Dig into our artificial intelligence (AI) and space technology stock screener to identify and analyze the highest-conviction ideas that match the catalysts and storylines that matter most to you.

Take control of your investment journey

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Want to know what you’re missing?

Fresh ideas move quickly, so initial momentum can disappear before most investors see it. Take a look at our picks now, while the data still matters, and consider acting before the opportunity changes.

• Look for quality on sale by reviewing 44 hand-picked, high-quality undervalued stocks that are currently undergoing thorough vetting for cash flow and balance sheet strength, before broader attention catches up.
• Focus on reliable income by checking out our concentrated group of eight dividend bastions that can help you anchor your portfolio when growth stories are most hot.
• We identify potential resilient leaders by scanning 70 resilient target stocks with low risk scores, a combination of fundamentals that many investors are not fully pricing in today.

This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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