Brookfield Asset Management (TSX:BAM) really does stand out as one of those high-level dividend payers to stash away in a TFSA (Tax-Free Savings Account) for the long haul. Apart from the generous and growing dividend, currently yielding 3.1%, the firm has been making some very smart deals across the board.
Indeed, the alternative asset management play is cashing in on increased demand for alternative investments, and while shares have enjoyed quite the respectable run over the past year, gaining close to 18%, the name is pretty much flat on a year-to-date basis. As we set our sights on the new year, I’d look for Brookfield Asset Management to make up for lost time as it begins to seize opportunities to be had in the realm of AI (artificial intelligence) real estate.
Brookfield makes big bet on the future of AI infrastructure
Indeed, the AI boom has been hogging the headlines nonstop over the past few years. And while the “AI bubble” commentary has kicked up a few notches, especially in the past quarter, I still think that those who stand on the sidelines might just miss the wave that helps propel broad markets even higher from here. Of course, there are going to be some bumps in the road, but if you’re a younger TFSA investor, that really is the price that you will need to pay to capitalize on opportunities to be had in this so-called fourth industrial revolution.
Now, back to Brookfield, which recently got a bid higher when news broke that the firm will invest US$5 billion in an AI infrastructure deal with Bloom Energy. Indeed, it’s a massive deal that could change the game for Brookfield, as it seeks to meet demand for the booming field of AI infrastructure, a corner of the market that might have considerable returns on investment.
Even if there were an AI bubble forming with a burst that could happen at some point over the next two to five years, I think Brookfield is one of the names that could continue higher as it looks to do its part to help power the AI boom from the background. With US$5 billion going towards fuel cells for next-generation AI factories, Brookfield may very well have kicked off the start of a series of strategic investments that will push Brookfield further into the future.
Could Brookfield become the king of AI real estate?
Indeed, AI real estate demand may very well be on the cusp of massive growth. And with expertise not only in real estate but also in renewable energy sources, I view Brookfield as a potentially rising star in the AI property (data centres and factories) scene. Of course, time will tell how many more such deals Brookfield looks to make through the AI uprising.
Personally, I think the latest US$5 billion is just the start as the alternative asset manager looks to make an even larger splash as the AI revolution races forward, with a slew of hyperscalers and energy titans looking to capitalize on what appears to be a generational opportunity.
With shares of BAM stuck in a bit of a consolidation channel in the $75-80 range, I’d look to step in as a buyer following the big AI infrastructure partnership. The 24.75 forward price-to-earnings multiple seems too low, given the opportunities at hand.
