While memory giant Micron Technology Inc. (NASDAQ:MU) has dominated market headlines with a massive stock run, Wall Street is turning its attention to these small-cap stocks part of the Russell 2000 Index that are actually building the physical infrastructure of the AI grid.
Russell 2000 Darlings Outperform MU
Major analyst firms have officially reiterated “Outperform” ratings for Bloom Energy Corp. (NYSE:BE) and Applied Optoelectronics Inc. (NASDAQ:AAOI)—two Russell 2000 standouts whose nearly 1,000% gains over the year are handily outperforming traditional semiconductor favorites.
Powering The AI Squeeze
With hyperscalers starved for electricity, Bloom Energy provides rapid on-site solid oxide fuel cells to bypass multi-year grid utility backlogs.
RBC Capital recently reiterated its “Outperform” rating and a $335.00 price target for BE, representing a 43.02% upside from its current levels. The decision follows confirmation that a massive Wyoming data center project is moving forward directly with a hyperscaler customer.
According to RBC, the development features a “1.8 GW BTM power plant (900 MW being BE fuel cells, the other 900 MW being gas turbines).” This flawless execution solidifies Bloom's position as an indispensable power cornerstone for the AI buildout.
Connecting AI Hardware
While Bloom commands the power grid, Applied Optoelectronics controls the optical transceivers required to shuttle data between high-powered AI chips.
Raymond James reiterated its “Outperform” rating on AAOI with a $160.00 price target, emphasizing that “supply, not demand, is the primary challenge” for the company.
To meet this insatiable appetite, AAOI plans to scale monthly production capacity past “$450M by mid-2027.” Raymond James pointed to a “realistic bull case” where annualized EPS “could reach $11.00–$12.00,” vastly exceeding Wall Street's current consensus.
High-Wire Valuations
These exponential gains leave both companies priced for perfection. Bloom trades at about 117 times forward earnings, and Applied Optoelectronics at about 110 times — more than four times the Russell 2000's roughly 25 times multiple.
As long as megacap technology capital spending accelerates, these two physical infrastructure plays are expected to comfortably defend their steep valuations and continue pacing the broader hardware sector.
Price Action
On a year-to-date basis, BE has gained 169.57%, and AAOI has risen by 402.38%, while MU advanced 212.49%. Meanwhile, BE and AAOI have significantly outperformed MU over the last year, according to Benzinga Pro data.
Benzinga Edge Stock Rankings show that BE maintains a weak price trend in the short term but a strong trend in the medium and long term, with a poor value score. BE was 3.33% higher in premarket on Thursday.
Meanwhile, AAOI maintains a strong price trend in the short, long, and medium terms. AAOI was 2.04% higher in premarket on Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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