Dan Niles Says AI Infrastructure Rally Has ‘At Least A Year’ To Run — Names Intel His Favorite Chip Bet

Dan Niles remains bullish on AI, citing strong infrastructure spending and cloud growth, while warning that elevated yields and geopolitical risks could drive volatility.

• Dan Niles said cooling inflation and economic data support markets, and he expects the agentic AI boom to continue. 
• He added that a potential $500 billion financing package, backed by Nvidia, could further fund AI infrastructure. 
• He favors Intel, saying its $20 billion capital raise eased funding concerns despite recent gains. 

Dan Niles, founder of Niles Investment Management, remains bullish on the artificial intelligence trade despite recent market volatility, and believes that the AI infrastructure spending boom still has room to run. While elevated Treasury yields, oil prices, geopolitical tensions and election risks could fuel further swings, Niles sees the longer-term AI investment story remaining intact. 

AI Investment Still Has Momentum

In a post on X, the portfolio manager said recent economic readings have been relatively supportive. Inflation measures and indicators such as consumer sentiment and retail activity have cooled, while a roughly 5% increase in oil prices pushed the Treasury yield curve higher without materially increasing expectations for a rate hike.

“Looking forward, I continue to believe the impact of Agentic AI with the advent of OpenClaw on January 30th has at least a year to run”, said Niles. 

He said that token generation has multiplied several times since late January, more than compensating for falling token prices as open-weight models have gained traction. He estimates the combined annualized revenue pace of OpenAI and Anthropic has climbed from about $29 billion at the end of last year to roughly $100 billion. 

Cloud Giants Support The Capital Cycle

Spending by the largest hyperscalers has increased sharply. Niles points to stronger cloud growth at Amazon.com (AMZN), Microsoft (MSFT) and Alphabet (GOOGL), alongside improving operating margins.

“Capex from the Big6 hyperscalers accelerated from 84% y/y/ in CQ1 to 92% in CQ2 with forecasts for nearly 100% in Q3. But this is being supported by cloud revenue growth at the 3 Big Public cloud vendors.”

Niles says a $500 billion financing arrangement, supported by up to $125 billion from Nvidia, could provide cheaper funding for AI infrastructure spending by companies outside the major hyperscalers. 

Risks Are Becoming Harder To Ignore

However, Niles cautions that long-term Treasury yields remain elevated, with the 30-year rate around 5.3%, while oil-market uncertainty could add pressure to consumers and markets.

He also expects geopolitical tensions involving Iran and the Strait of Hormuz to remain a potential market complication. “Given large scale offensive US military actions are seemingly off the tablein favor of financial sanctions, probably driven by current election polls, I now believe Iran is likely to hold the Strait of Hormuz hostage until past the US mid-terms.”

Intel Stands Out As Funding Concerns Ease 

Niles says the easiest portion of the recent AI rebound may have passed. Several AI infrastructure stocks fell despite delivering strong earnings and outlooks, suggesting investors have become less willing to reward already-expensive shares.

Still, he remains bullish overall. Niles expects value to continue moving toward the infrastructure underpinning AI, particularly cloud providers and semiconductor companies.

Niles pointed to Intel Corp. (INTC), as his preferred semiconductor stock, and added that it 0.8% last week despite a $20 billion equity offering that could dilute shareholders by roughly 5%. He believes the capital raise removes a key funding concern, even after the stock’s 178% gain so far this year. 

So far this year, the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ) have gained 13% and 19% respectively, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) has climbed 11%.   

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