The artificial intelligence (AI) wave is past its hype. While still an interesting area of investment, every large language model, real-time analytics app, and network needs power, computers, cooling, data centres, energy supply, and connectivity. That’s why now, the real money isn’t with the flashy AI makers; it’s in the plumbing that keeps AI running.
That’s why today AI infrastructure should be on every Canadian investor’s radar. It’s not a simple theme, but one backed up both abroad and domestically, with Canada offering a $705 million program to build sovereign AI compute systems. Yet if there’s one company that could seriously benefit, it’s Brookfield Infrastructure Partners (TSX:BIP.UN).
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About BIP
First, let’s look at what BIP is into, because AI isn’t the only reason the company is around. This Canadian stock is a global infrastructure operator. The company owns and operates long-lived assets in four main segments, namely utilities, transport, midstream, and data.
Yet all these areas are connected to AI in some form, whether it’s the electricity transmission lines from utilities, transport of products, midstream power, or, of course, the data segment with fibre networks and telecom towers. Therefore, BIP sells itself as one of the relatively rare pure play infrastructure investments.
Into earnings
The company’s success is supported by strong recent earnings. The second quarter brought in three new acquisitions, generating substantial proceeds as well through asset sales, according to management. The second quarter saw a surge in net income to US$69 million from US$8 million the year before, and funds from operations at US$638 million from US$608 million.
The increase came from a combination of strong organic growth above its target, as well as contributions from acquisitions completed over the last year. Furthermore, there were some inflation-linked rate increases in the utility and transport segments. What’s more, the company stated it’s commissioning over US$1.5 billion in new capital projects.
What to watch
Of course, the company is already successful thanks to its investment in these other energy areas. However, the data arm offers a hugely successful opportunity. The company therefore gives exposure to core, lower volatility infrastructure and growth through data and telecom infrastructure — all of which will drive the rising priority in a digital and AI-driven economy.
Altogether, holding BIP lets investors participate in global infrastructure expansion while denominated in Canadian dollars. The data segment is scaling fast, and as AI, cloud, and 5G demand all expand, these assets could all be major growth providers. It’s also a hedge against inflation through its long-term contracts, making the company a solid investment no matter how you slice it.
Bottom line
AI is here, and it’s expanding. However, the infrastructure to support this new reality needs to come along with it — not just in Canada, but around the world. Because of this, companies that have a solid reputation in this field will need to get on board, and fast.
That’s what makes BIP such an easy solution. It’s already a strong investment when it comes to the solid infrastructure we’ve been using for decades. Meanwhile, it now has a brand new opportunity to create more growth, all while being backed by years of income. So, if you’re looking for a solid investment in AI infrastructure, this stock has it all.
