Alphabet says its spending on AI will continue to increase. 2 Data Center Stocks to Buy and Hold Until 2030.

Alphabet (GOOGL -1.40%)(GOOG -1.45%) has spent $51.4 billion on capital projects in the third quarter of 2026 as it builds out its artificial intelligence infrastructure. This was more than double his spending a year earlier. And there are no plans to slow down. In its Oct. 28 report, Google’s parent company maintained its range of $195 billion to $205 billion for 2026 and said it expects that spending to increase significantly in 2027.

To reach the bottom of this year’s range, Alphabet would need to spend around $63 billion in the fourth quarter alone. That would exceed the third-quarter total by about $12 billion, after an increase of more than $6 billion from the second quarter.

Microsoft (MSFT -1.55%)which released the same day, spent $45.2 billion during its first fiscal quarter (the three months ending September 30). This amount is less than the $50 billion planned because some capacity from third-party providers arrived late. But management expects spending to accelerate in the second half of its fiscal year, primarily on central processing units (CPUs) and graphics processing units (GPUs).

Yet two of the companies providing these data centers are trading well below their highs. At the time of writing these lines, Nvidia (NVDA -4.22%) is about 10% below its October 6 closing record, and Vertiv (VRT -5.46%) is about 35% below its May closing record – even after a 16% rise on October 28.

Image source: Getty Images.

1.Nvidia

Of course, a lot of that spending goes toward chips like Nvidia’s. About three-quarters of Microsoft’s capital spending last quarter was on short-lived assets, primarily CPUs and GPUs, up from about two-thirds the previous quarter. And CEO Satya Nadella said Microsoft has connected its first Nvidia Vera Rubin GPUs.

Nvidia’s revenue jumped 106% year over year to $96.2 billion for its fiscal 2027 second quarter, which ended July 26. Management expects third-quarter revenue of about $108 billion, which would be about 89% higher than last year.

Sequential growth is slowing, however. It has fallen from 22% in the third fiscal quarter of 2026 to 20%, 20% and 18% since then, and the new outlook is around 12%.

In other words, Nvidia continues to grow quickly, but not as fast as before. But for a long-term shareholder, I think the most important trend is that customers continue to increase their budgets, and Alphabet just announced plans to do so again in 2027.

Yes, Nvidia faces competition. Google Cloud revenue soared 103% last quarter and Alphabet CEO Sundar Pichai highlighted strong demand from a wide range of customers for the company’s own tensor processing unit (TPU) systems. But with Alphabet’s spending expected to rise significantly again, there’s arguably room for both.

2. Vertiv

Vertiv, which provides the power and cooling equipment data centers need, just recorded its fastest growth this year.

Showing how demand has sharply increased, Vertiv’s third-quarter net sales jumped 61% year-over-year to $4.3 billion. Organic growth (which excludes acquisitions and currency fluctuations) accelerated to 55%, about triple the 18% pace recorded in the second quarter. Its non-GAAP (adjusted) operating margin has widened each quarter this year, from 20.8% to 22.6% to 25.2%. Adjusted earnings per share rose 78% to $2.21.

Additionally, orders for organic products more than doubled year over year, management said during the earnings conference call. But it also said it would no longer release order data from now on, so investors would have less to do.

Management also raised its guidance for 2026. It now expects 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 in 2027.

However, the stock can fluctuate wildly. Shares fell 17% on July 29, when Vertiv posted 24% growth in second-quarter sales and said temporary supply chain congestion had dampened sales somewhat.

What is the best buy now?

Both companies are paid for the same construction. The main difference is the price.

Analysts on average expect Nvidia to earn around $15.90 per share in fiscal 2028 (the year ending January 2028). With shares near $215, that’s about 14 times earnings. Vertiv, at about $243, trades at about 26 times what analysts expect to earn in 2027, or nearly double Nvidia’s price-to-earnings multiple, for a company that will stop reporting orders.

Ultimately, I’d be happy to hold both stocks until 2030. If I could start with just one, I’d consider Nvidia first, because investors are paying much less for each dollar of its expected earnings. With Vertiv, I would probably start with a smaller position.