In the Loop – May 1, 2026
“In The Loop” is designed to give you a short update reflecting major developments, earnings, and investment trends across some core Equity Income and Growth holdings. All clients should be aware that individual buy/sell recommendations will be conveyed directly to you on an individual basis. Have a great weekend.
This week was a busy week for earnings announcements as well as a planned visit from our team in Cincinnati. We spent two full days of research and planning that we found very useful. This has been a great partnership.
In the most recent earnings reports, Microsoft, Alphabet, Meta Platforms, and Amazon each delivered results that exceeded expectations. The results were fueled by accelerating cloud momentum and surging AI demand—highlighted by strong growth across Azure, AWS, and Google Cloud, while Meta stood out with robust advertising revenue growth exceeding 30% year over year and expanding margins driven by AI-powered engagement. More important than the earnings themselves are the magnitude of forward investment. All four companies increased or reaffirmed aggressive spending on AI infrastructure: Microsoft and Alphabet each guiding approximately $180–190 billion, Amazon near $200 billion, and Meta in the $125–145 billion range for 2026. Taken together, this points to a combined capital expenditure commitment of roughly $600–700 billion, with most estimates centering around $650 billion. This is no longer “Tech Cap- Ex”, this is infrastructure spending on par with national buildouts.
We tried to outline this point last week, but it is so hard to imagine what $600-$700 billion looks like. The average Market Cap of an S&P 500 Company is $90-100 billion. Therefore, $650 Billion could buy 6 -7 entire companies. It could buy Walt Disney, Nike, Starbucks, Boeing and Goldman Sachs combined. We are witnessing a historic capital cycle where a handful of technology companies are building the infrastructure backbone of artificial intelligence. This could replace and create entire industries. Wall Street is waiting to see if this massive AI Infrastructure investment will pay off. However, much like the California Gold Rush, the companies making money today are the ones selling the “Picks and Shovels.” We are finding compelling investment opportunities are not only in the hyperscalers themselves, but rather in the companies supplying the power, cooling, and physical infrastructure required to make AI possible.
In this environment, the winners are those positioned at the intersection of electricity, engineering, and execution, where demand is accelerating faster than supply and pricing power is emerging. We are believers in this approach because it fits with our US Resiliency and Pre-War filters and the thought of a two-speed economy where we want to invest in the “Investment side of the economy versus the Consumption side”.
The USS Gerald R. Ford aircraft carrier will be heading home following a record-setting deployment. This could suggest the administration could be settling into the blockade as the primary instrument rather than positioning for a kinetic/decisive escalation.
The Federal Reserve kept rates unchanged. I would expect it to stay as it is until the Iran conflict is resolved. No Hike, No cut. The 10 Year Treasury is 4.37%. This rate will move with the inflation expectations coming from the closure of The Strait of Hormuz.
Individual Company Updates
Alphabet continues to deepen its AI and infrastructure positioning, highlighted by reported discussions with Marvell to develop additional custom AI chips aimed at improving efficiency and reducing reliance on third-party GPUs. This builds on an increasingly diversified TPU ecosystem alongside Broadcom and MediaTek. Beyond core operations, Alphabet could benefit materially from its stake in SpaceX, potentially unlocking significant value over time. At the same time, the company is expanding its footprint in government and defense, with ongoing efforts to deploy Gemini AI models and TPU infrastructure within classified environments under Pentagon cloud initiatives, reinforcing its role as a critical provider of next-generation compute infrastructure.
Amazon is doubling down on AI infrastructure through a major expansion of its relationship with Anthropic, committing billions in additional investment while securing what is effectively the largest cloud spending agreement in history. Anthropic has pledged over $100 billion in long-term AWS usage, locking in multi-generation demand for Amazon’s custom silicon, including Trainium and Graviton chips. This reinforces AWS’s positioning at the center of AI compute while accelerating Amazon’s push into proprietary chip development. Importantly, Amazon is strategically investing across competing AI ecosystems, including both Anthropic and OpenAI, ensuring it captures infrastructure spend regardless of which frontier model provider ultimately leads, a move that strengthens its role as a foundational layer in the AI economy.
nVent continues to position itself at the center of electrification and data center infrastructure, with accelerating exposure to high-growth end markets such as AI-driven power demand and grid modernization. Management outlined an ambitious multi-year framework targeting double-digit organic growth, margin expansion, and strong free cash flow conversion, supported by portfolio transformation and increased mix toward higher-value electrical and thermal solutions. Investor sentiment has improved following its recent outlook, as the company benefits from structural tailwinds tied to rising electricity intensity and the buildout of resilient power systems.
Vertiv remains a key beneficiary of the AI infrastructure boom, providing critical thermal management, power, and cooling solutions for hyperscale and enterprise data centers. Demand continues to outpace expectations as AI workloads drive higher power density requirements, increasing the need for advanced cooling and energy-efficient systems. The company has demonstrated strong pricing power and backlog growth, with margins improving as it scales into higher-value solutions. Vertiv is increasingly viewed as a core “picks and shovels” play on AI, directly tied to the physical buildout of next-generation data center capacity.
MasTec is emerging as a critical infrastructure enabler, benefiting from rising investment across energy, utilities, and communications networks. The company is well-positioned to capture spending tied to grid expansion, renewable integration, and pipeline and LNG infrastructure development. As hyperscalers and utilities ramp capital expenditures to meet surging electricity demand, MasTec’s engineering and construction capabilities are seeing increased demand visibility. While execution and project timing can create near-term volatility, the longer-term outlook is supported by a multi-year infrastructure cycle tied to energy security and electrification.
Sterling Infrastructure continues to benefit from strong demand across e-infrastructure, data centers, and large-scale site development, positioning itself as a leveraged play on the physical expansion of digital and industrial capacity. The company has successfully shifted toward higher-margin, less cyclical segments, including data center site work and logistics infrastructure. This transition has driven improved profitability and more consistent growth, supported by increasing demand from hyperscalers and industrial reshoring trends. Sterling’s niche positioning allows it to capture a growing share of specialized, high-value construction activity.
Arista Networks remains a core enabler of AI and cloud networking, benefiting from the rapid scaling of data center interconnects and high-performance networking required for AI workloads. The company continues to gain share with hyperscale customers by delivering high-speed, software-driven networking solutions optimized for large-scale AI clusters. As cloud and enterprise customers upgrade to support higher bandwidth and lower latency requirements, Arista’s growth outlook remains strong. Its asset-light model and high margins position it as one of the most efficient ways to gain exposure to the AI infrastructure buildout.
NextEra Energy stands at the intersection of renewable generation, grid reliability, and rising electricity demand, making it a key beneficiary of the AI-driven power cycle. The company continues to expand its renewable portfolio while investing in transmission and storage infrastructure to support long-term demand growth. With hyperscalers increasingly seeking long-term power agreements, NextEra’s scale and development pipeline position it as a preferred partner. The company’s regulated utility base provides stability, while its clean energy platform offers growth tied to structural electrification trends.
Williams Companies plays a critical role in U.S. energy infrastructure, particularly in natural gas transportation, which is becoming increasingly important as a reliable power source for data centers and industrial demand. As electricity consumption rises, natural gas remains a key bridge fuel, supporting grid stability and baseload power generation. Williams benefits from long-term, fee-based contracts that provide stable cash flows, while its infrastructure footprint positions it to capture incremental demand from LNG exports and domestic power generation growth tied to AI and electrification trends.
AIRR invests in a diversified portfolio of companies that are at the forefront of the American Industrial Renaissance. Richard Bernstein’s team focuses on those companies that are poised to benefit from infrastructure development, technological advancements, and a revitalized domestic manufacturing landscape.
Formidable Asset Management (“Massey Romans Capital”) is an investment adviser registered under the Investment Advisers Act of 1940. The information presented in the material is general in nature and is not designed to address your investment objectives, financial situation or particular needs. Prior to making any investment decision, you should assess, or seek advice from a professional regarding whether any particular transaction is relevant or appropriate to your individual circumstances. Although taken from reliable sources, the Firm cannot guarantee the accuracy of the information received from third parties.
The opinions expressed herein are those of the Firm and may not actually come to pass.
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