Powering the AI Buildout
The ongoing AI infrastructure buildout differs from historical infrastructure buildouts in one key respect.
Unlike past infrastructure waves—railroads (1800s), electricity (early 1900s), broadband (1990s to 2000s)—which relied heavily on debt financing, the AI boom is being fueled primarily by the vast free cash flows of the leading tech giants.
Analyst consensus estimates for NVDA call for the company to generate more than $200 billion of free cash flow by fiscal year 2028, versus just over $60 billion in the last fiscal year.
Given the scale of investment into AI capacity, many investors are quite wary of the risk that the tech industry is moving too far, too fast. But as today’s deal illustrates, it is largely being funded by internally generated cash flows—with much less dependence on the capital markets.
Following the announcement, NVDA shares rose just under 4%. NVDA closed just short of its all-time highest level.
We last updated 76report subscribers on NVDA at the end of August, after its highly anticipated quarterly earnings report (NVIDIA Reports: The AI Race Is On).
The positive response by investors in NVDA today goes beyond the financial implications. The deal also reinforces NVDA’s technological dominance within AI as it ties a key player ever closer to its own standards and systems.
This technological fusion between two leading players in AI is likely to raise antitrust concerns and invite scrutiny, a risk factor which we will need to monitor.
However, U.S. industrial policy under Trump recognizes the urgent need for U.S. companies to establish global dominance in AI as rivals like China seek the same. We expect the tie-up between these two American AI champions to be interpreted by regulators through this lens.
We continue to view NVDA as a core holding within the American Resilience Model Portfolio and are encouraged by the announced partnership.
Oracle gains
Oracle (ORCL) is another AI stock that has received a great deal of attention lately. ORCL surged after announcing earlier this month massive growth in its order backlog.
ORCL has also been a position within the American Resilience portfolio since we added it in July 2024. We discussed our reaction to ORCL’s first quarter earnings report on September 9, 2025 in Oracle Flying High on AI Tailwinds.
Interestingly, ORCL shares advanced more than 6% today, exceeding the positive reaction of NVDA. ORCL was specifically mentioned in the press release as a valued collaboration partner with OpenAI and NVDA.
ORCL is likely to play a key role in the commercial relationship between OpenAI and NVDA. Essentially, ORCL buys the GPUs from NVDA, configures them within data centers, and then sells the AI compute capacity to OpenAI.
The reason ORCL shares rose so sharply earlier in the month was that it had entered into enormous and previously undisclosed contracts with major AI players like OpenAI, which alone is reported to be on the hook for some $300 billion of payments to ORCL.
Today’s announcement gives investors some extra assurance that OpenAI will actually have the financial resources in the years ahead to fulfill its end of the bargain.
Other downstream beneficiaries
Numerous other stock, across our Model Portfolios and beyond, stand to benefit from the OpenAI/NVDA announcement, which ultimately recycles billions of dollars of AI profits back into AI infrastructure investment.
One stock we have historically discussed with 76report subscribers is Digital Realty Trust (DLR), a leading global operator and developer of data centers.
DLR is a Real Estate Investment Trust (REIT) that is held within our Income Builder Model Portfolio. Shares of DLR advanced nearly 2% today, while the REIT index was flat, likely in response to this news.
DLR has publicly announced strategic partnerships with both ORCL and NVDA. The company’s expertise is on the real estate side—planning and managing the facilities that house AI factories, which allows the technology companies to focus instead on what they do best.
DLR generally benefits from AI data center growth and specifically benefits as a key partner of ORCL, which wants to focus its capital spending on technology hardware like NVDA GPUs, rather than brick and mortar facilities.
Navigating the AI opportunity set
With NVDA alone now representing some 8% of the S&P 500, AI has in just a few short years become the key investment theme driving the stock market.
We also view AI as the most powerful force reshaping the global economy—with significant implications for all industry sectors and all asset classes.
We encourage subscribers to read our Guide to Investing in the Age of AI for a fuller analysis of AI impacts on the economy and markets.
