Microsoft and 2 AI Infrastructure Stocks Riding Stable Energy Costs

The current market situation is creating an unusual mix of risk and relief for large-cap developed-market stocks, driven by geopolitics around Iran, record highs in the S&P 500 and Nasdaq, and contained oil prices. Stable energy costs can help protect margins and cash flows, which makes them a crucial factor to consider when evaluating stock performance. To capitalize on this trend, investors should look at companies with exposure to stable energy costs.

Microsoft is one such company that benefits from the current market conditions. It's a global technology firm with a broad revenue base across software and cloud services, including Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The company has a strong earnings momentum driven by Azure, Copilot, and massive data center spending. However, it also carries real risks such as heavy AI capex, insider selling, and active antitrust and AI-pricing investigations.

Two other companies that stand out are Rambus, a semiconductor firm focused on memory interface chips and security IP for demanding uses like AI data centers, government systems, and automotive electronics. It has a market capitalization of around $11 billion and sits at the intersection of AI buildout and memory bandwidth bottlenecks in data centers worldwide.

Hewlett Packard Enterprise is another company that benefits from stable energy costs. It's an enterprise IT firm with significant segments in Networking, Corporate Investments, and Other. The company has a market capitalization of around $78 billion and sits at the intersection of AI data center demand, high-performance networking, and hybrid cloud spending.

These companies have compelling narratives that make them worth considering for investors looking to capitalize on stable energy costs. However, it's essential to keep in mind the risks associated with each company, including debt levels, insider selling, and antitrust investigations.