Artificial intelligence (AI) infrastructure is one of the most popular investments in the world right now, and Canada is best positioned for it. Alternative asset management companies are buying up AI data centres left and right, hoping to capitalize on the gains being made by AI companies. So far, most of the money in AI is being made by semiconductor (computer chip) companies, but data centres are another part of the puzzle that could command big dollars as well. Providing the space where AI servers and chips are located, such facilities are absolutely vital to powering the AI economy.
Canada is rapidly becoming a major player in the world of AI infrastructure. With plenty of land and a cool climate, Canada has many features ideally suited to hosting AI data centres. Cohere Inc is already working on such a data centre, a project the federal government has committed $240 million to. Likewise, the big U.S. cloud companies, such as AWS, Azure, and Alphabet (NASDAQ: GOOG) have committed to building data centres in Canada.
In this article, I explore the investments Canadian companies are making in AI infrastructure and how they could spur the next big asset boom.
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Cohere’s AI data centre
Cohere is the most important Canadian company working on AI right now. A privately held company, it develops large language models (LLMs) for highly specialized industries like finance and healthcare. The company uses Google Cloud’s Tensor Processing Unit (TPU) servers, making it one of the few companies other than Google itself that can use them. TPU chips reportedly outperform NVIDIA’s best offerings by some measures.
Cohere’s biggest contribution to AI infrastructure is its planned data centre. The company is spending $725 million to build a Canadian data centre, for which the federal government contributed $240 million. Cohere’s data centre will help the company compete globally against well-funded U.S. and Chinese competitors. The company also plans to lease out servers to smaller Canadian companies.
Brookfield bets big on AI infrastructure
Brookfield Corp (TSX: BN) is another Canadian company betting big on AI infrastructure. Through its infrastructure subsidiary, Brookfield Infrastructure Partners (TSX: BIP.UN), Brookfield is making big bets on AI data centres and related infrastructure such as telecommunications towers.
Over the last two years, Brookfield and Brookfield Infrastructure Partners have bought up multiple AI data centres. The most recent such deal was a $5 billion one with Bloom Energy that will see that company’s fuel cells deployed in facilities across the United States. Brookfield is in the fortuitous position of owning strategically located data centres in Texas, perfectly positioned to serve the California tech giants next door. With Bloom, it could innovate in powering those data centres as well.
Investing takeaway
The key investing takeaway from Canada’s AI data centre boom is that there are many ways to play AI. While most investors assume that “AI stock” means shares in one of the big tech companies, the truth is that there are many other ways to get in on AI. While NVIDIA, Palantir and other AI giants get bid up to nosebleed multiples, Canadian data centres offer sensible valuations. There may be opportunities here worth investing in.
