Hyperscalers Are the Backbone of AI. Here's Why I Own Amazon, Alphabet, and Meta Platforms.

Hyperscalers are companies that own vast networks of data centers. Although cloud computing firms are commonly linked to these entities, some large-cap technology businesses opt to construct their infrastructure in-house to reduce expenses. In essence, these corporations are propelling the AI infrastructure boom, investing substantial capital expenditures (capex) in the process.

While component manufacturers benefit from the surge, it is the financially robust hyperscalers that hold the reins. After all, if they fail to see significant returns on their AI infrastructure investments, they retain the power to reduce their spending. Among the leading hyperscalers, I personally hold shares in Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), and Meta Platforms (NASDAQ: META), considering them among the top growth stocks for the long term.

Each of these companies boasts strong core businesses with formidable barriers to entry, generating substantial operating cash flow to fund their AI infrastructure spending, which they are currently achieving favorable returns on. Here's the rationale behind my investment in these three stocks.