Hyperscalers' AI Capex Spree Boosts Vertiv and Astera Labs

A recent report from Gorodenkoff / Shutterstock.com highlights Amazon and Microsoft's massive investment in AI capex, estimated to be around $100B to $105B per quarter.

Two companies, Vertiv (NYSE:VRT) and Astera Labs (NASDAQ:ALAB), have reported strong earnings due to this increased spending. Both sell essential components for the hyperscalers' infrastructure growth.

Vertiv's Q2 revenue grew 24.1% YoY to $3.27B, with Americas sales increasing by 29.2%. The company's adjusted operating margin expanded to 22.6%, and free cash flow tripled to $925.3M. CEO Giordano Albertazzi attributed this success to years of deliberate investment in technology and customer partnerships.

Astera Labs reported even higher growth, with revenue increasing by 104.5% YoY to $392.4M. The company's non-GAAP EPS beat expectations by 15.61%. However, Astera's Q3 guidance was surprisingly high, with revenue expected to reach $540M to $560M.

The strategies of Vertiv and Astera differ sharply. Vertiv is the physical bet, capturing an estimated $1.2B to $1.5B per quarter of hyperscaler spend, while Astera is the silicon bet, capturing around $220M to $280M per quarter. The former has a more diversified customer base and higher valuation.