10 Best Pick and Shovel AI Stocks to Buy for the Long Term

In this article, we will discuss the 10 Best Pick and Shovel AI Stocks to Buy for the Long Term.

Strong tech earnings and ongoing heavy capex are turning even skeptics more bullish on the AI trade. Dan Niles of Niles Investment Management recently said on CNBC that bubble fears around AI do not mean the bull run cannot continue. He believes there is further upside in the AI trade and expects the rally to continue at least into the beginning of next year.

Niles pointed to a recent shift in the AI industry toward agentic AI where models are no longer limited to answering questions but can complete multi-step tasks using external tools and data sources. He said this transition marked a turning point in AI demand, significantly increasing the need for computing power and supporting the broader AI investment cycle.

“Two months prior to OpenClaw being finalized, token growth was about 20% over the prior two months,” Niles said. “And the two months after OpenClaw was finalized, the growth was over 120%. And so you should see at least strong growth, in my opinion, through the beginning of next year. And then you’re going to lap those harder comparisons, and then we’ll see what happens. But that’s one major difference, at least between now and I think year four and five of the internet is you have this major step change in token generation that you need right now.”

For this article, we selected 10 stocks that sell the tools, infrastructure, and technologies powering the AI revolution. We focused on major AI-related companies with strong growth catalysts and relatively low short interest. Lower short interest was used as a filter to identify stocks with less negative sentiment and fewer bearish bets from investors, helping avoid heavily crowded or highly controversial names. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).

10. Arista Networks (NYSE: ANET)

Short Interest: 1.7%

Arista makes high-speed switches and routing systems used by major cloud players like Microsoft Azure, Meta Platforms, Amazon Web Services, and Google Cloud to connect massive server and GPU clusters. On the software side, it runs its Extensible Operating System that helps automate networks and manage traffic at scale.

The company is seeing strong demand as AI infrastructure buildouts accelerate. Its recent results showed revenue rising about 35% year over year, and it raised its full-year growth outlook to around 28% from 25%.

So why did the stock fall after the results? Expectations were high. Its Q2 guidance came in slightly below estimates, missing by roughly $200 million, which was enough to disappoint investors despite strong fundamentals.

The real driver behind Arista Networks growth is the shift in how data centers are built for AI. Unlike traditional cloud setups, AI workloads require all-to-all networking, where GPUs constantly communicate with each other. That requires high-performance switching and routing. Arista Networks operates right at this layer—its products ensure GPU clusters are fully utilized with minimal idle time. That matters because GPUs are expensive, and companies want to maximize efficiency from every unit.

9. Trane Technologies (NYSE:TT)

Short Interest: 1.7%

Trane Technologies (NYSE:TT) makes heating, ventilation, air conditioning (HVAC), and cooling systems. It builds the systems that keep buildings and data centers cool, energy-efficient, and running properly. Its products include chillers, cooling plants, and now advanced thermal management systems used in large facilities like factories, commercial buildings, and increasingly AI data centers.

Trane Technologies recently raised its outlook amid strong demand for its commercial HVAC and data center businesses. In the first quarter, enterprise organic bookings jumped 24%, while backlog climbed to a record $10.7 billion, up more than 30% from year-end 2025.

Applied Solutions bookings at Trane Technologies surged more than 160% in the first quarter, which shows the level of demand AI is creating for Trane’s solutions. This business sells large commercial HVAC and cooling systems used in places such as data centers, hospitals, airports, factories, and office buildings. It sells products including chillers, cooling plants, air handling systems, ventilation equipment, and building automation systems.

Management also said Stellar Energy could become a $1 billion business within the next 2 to 3 years, which could become another growth catalyst for the stock. Stellar Energy designs and builds large-scale cooling and energy infrastructure systems for hyperscale data centers and industrial facilities, including modular chiller plants and central utility plants.

8. Eaton Corp (NYSE:ETN)

Short Interest: 2%

Eaton Corp (NYSE:ETN) is one of the key beneficiaries of the surge in power demand and the electrification wave that is accelerating after the AI revolution. Eaton is a top AI pick-and-shovel name because it sells the electrical infrastructure and power management systems required to run AI data centers. AI is driving a sharp increase in electricity demand, with the International Energy Agency (IEA) estimating that electricity consumption from data centers could roughly double by 2030.

Eaton provides key products such as switchgear, power distribution units, circuit protection systems, and backup power solutions that are essential for hyperscale data centers. The company benefits directly from the global build-out of AI infrastructure because every new AI facility requires large-scale and reliable electrical systems. Its moat is strong because it operates in a highly specialized, safety-critical segment of the power industry with long design and certification cycles, deep relationships with utilities and hyperscalers, and high switching costs once its systems are embedded into data center architecture.

Janus Henderson Forty Fund stated the following regarding Eaton Corporation plc (NYSE:ETN) in its fourth quarter 2025 investor letter:

“We also are constructive on opportunities for power companies that are capitalizing on the rapid expansion of data center capacity to support AI. These include Eaton Corporation plc (NYSE:ETN), another relative detractor for the quarter. Eaton provides energy-efficient power management solutions for data centers and other industries. After strong performance earlier in the year, the stock declined in the fourth quarter as strong future orders growth was offset by production bottlenecks that resulted in slower-than-expected revenue growth. Investors also worried about the impact of near-term capital spending on margins. We see these as short-term issues, and we continue to believe in Eaton’s multi-year market opportunity powering data centers.”

7. Nvidia Corp (NASDAQ:NVDA)

Short Interest: 1.2%

Nvidia Corp (NASDAQ:NVDA) remains the clear winning pick-and-shovel name in the AI revolution. It makes high-performance GPUs used to train and run large AI models, and since nearly every major AI company depends on this compute power, demand has remained extremely strong.

This tight supply-demand balance has led to a GPU shortage. Data shows GPU availability is at its lowest level since late 2023 and early 2024. As a result, Nvidia Corp (NASDAQ:NVDA) has strong pricing power and high demand visibility. The company is also shifting to a one-year product release cycle, down from two years, to better keep up with rapid demand growth and competition.

Another indicator of strong demand comes from Foxconn, a key Nvidia Corp (NASDAQ:NVDA) manufacturing partner responsible for a large share of its AI hardware production. In March 2026, Foxconn reported a sharp revenue increase, with monthly sales rising about 10% from January levels, driven by strong momentum from new product launches. This is widely seen as an early signal of ramping production for Nvidia Corp’s (NASDAQ:NVDA) next-generation systems.

The upcoming Vera Rubin platform, expected to launch in the second half of this year, is also progressing well. Supplier data suggests production ramp-up is on track, reinforcing expectations that Nvidia Corp’s (NASDAQ:NVDA) next major product cycle is executing smoothly.

Polen Focus Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2026 investor letter:

“At the same time, the angst around an AI bubble and the future return from the vast infrastructure investment spend has seen enthusiasm wane for the immediate beneficiaries. Take NVIDIA Corporation (NASDAQ:NVDA) for example, in their most recent earnings report during the quarter they increased revenues in excess of 70% year-over-year and delivered meaningful beats on the top and bottom lines, while significantly increasing forward guidance well above consensus estimates. Despite these stellar numbers, the market reaction was one of disinterest as their shares declined post-print and have languished since despite continued evidence showing there seems to be a long runway of outsized future growth ahead for the company.”

6. Broadcom Inc (NASDAQ:AVGO)

Short Interest: 1.2%

Broadcom Inc (NASDAQ:AVGO) is one of the most important pick-and-shovel names in the AI revolution. It designs custom AI chips for hyperscalers like Google, Meta, and others, tailoring silicon to specific workloads instead of selling general-purpose GPUs. This business involves long co-development cycles, deep integration into customer data centers, and high switching costs, and that’s exactly where AVGO’s moat comes from.

But custom GPUs isn’t the only growth catalyst for the stock. Broadcom plays a central role in Ethernet-based data center infrastructure that moves massive amounts of data between thousands of GPUs. Its high-end switch ASICs are the core engines inside these networks. Key product families like Tomahawk, Trident, and Jericho handle different parts of this process: Tomahawk is used for ultra-high-speed switching in large AI clusters, Trident focuses on flexible enterprise and data center switching, and Jericho is designed for large-scale routing and long-distance, high-bandwidth data movement.

Clearbridge Dividend Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q1 2026 investor letter:

“In IT, we exited Oracle and trimmed Broadcom Inc. (NASDAQ:AVGO). On the semiconductor side, we modestly reduced our position in Broadcom to fund our new investment in Taiwan Semiconductor (TSMC). While Broadcom remains well positioned, and we remain constructive on the stock, the risk-reward outlook has diminished as the shares have tripled over the last two years. Further, whereas TSMC prospers regardless of who wins the semiconductor race (TSMC manufacturers chips for all the major semiconductor companies), one can conceive of scenarios where Broadcom could become less relevant in the future.”

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