Artificial intelligence (AI) is already booming. In fact, many worry that this could be a bubble in some cases, one that’s about ready to burst, even though AI is here to stay. That being said, there are offshoots of the AI industry that could provide investors with massive opportunities. One of those opportunities is AI infrastructure.
A hidden boom
There are a few ways that AI infrastructure could provide a hidden boom for investors. AI brings with it massive computer and energy demand. Luckily, Canada already has abundant energy resources, including hydro, natural gas and renewables to help cool these stations. In fact, the Canadian government launched the Canadian Sovereign AI Computer Strategy, with up to $700 million to support new AI data centres, and up to $1.7 billion towards supercomputing.
Furthermore, Canada’s largest pension funds, the “Maple 8,” have upped their investments in data centres and digital infrastructure overseas. Now, they’re eying domestic opportunities as well. This has even led to provincial competition, with Alberta launching an AI data centre strategy, targeting $100 billion in investment.
Others aren’t far behind, and large companies from OpenAI to Meta are considering building in Canada. We already have many infrastructure plans underway, with BCE, TELUS, and Pembina building AI data centres or energy infrastructure. But if you really want to benefit, here are the stocks I’d choose.
BEP
First off, we have Brookfield Renewable Partners (TSX:BEP.UN). This clean energy powerhouse already is a global phenomenon, into everything from hydro to nuclear power. Yet lately, it’s sinking its teeth into AI infrastructure. Not only is BEP getting into data centres, but it is also providing clean energy to companies like Alphabet and Microsoft.
The cash to achieve this is already there, with second-quarter results supporting future growth. Funds from operations rose 10% year over year, with revenue up to $1.7 billion from $1.5 billion the year before. Furthermore, as mentioned, BEP inked a “first of its kind” deal with Google to deliver up to 3,000 megawatts of hydro power in the U.S.
With solid growth in cash generation and a significant contract leading to more opportunities, it’s clear that BEP is going to play a huge role in supplying clean power to big tech. And that will certainly occur on a global scale.
RCI
Rogers Communications (TSX:RCI.B) is another company that’s likely to see even more buildout of AI infrastructure. AI computing needs very high bandwidth, and Rogers already operates extensive fibre, cellular, cable, and network infrastructure. In fact, it recently launched its own satellite program as well. As AI infrastructure spreads, Rogers will host or provide edge data centres in existing network sites. And demand isn’t going anywhere.
And again, we have a company seeing more growth than losses. Rogers stock grew 2% year over year to hit $5.22 billion, with net income of $157 million. Adjusted earnings came in at $1.14 per share, which was a drop from higher restructuring, acquisition and other costs.
Even so, the company has seen massive growth through acquisitions such as MLSE, along with continuing growth in its wireless and internet additions. Altogether, it’s likely to see growth as well from its core telecom and media business.
Bottom line
Together, BEP and Rogers are two strong choices for the AI infrastructure boom. These provide the most critical layers beneath AI infrastructure: power and connectivity. Without them, AI doesn’t work. Therefore, these are certainly two AI stocks to add to your watchlist on the TSX today.
