Tech stocks were bid higher on Wednesday, even with many mega-cap tech titans, including the AI-savvy Magnificent Seven, still in a bit of a tough spot. Some software names (think the SaaS plays feeling the AI disruption) are looking to make new lows despite the sudden ricochet in markets over hopes that the Iran war could be en route to ending, perhaps within the two-week ceasefire period. In any case, I think it’s way too soon to rotate back into risk-on plays, even as the risk-off plays look to exhaust and the commodity plays come in after outpacing nearly everything else.
Even as geopolitical pressures begin to ease, there’s still heightened anxiety about the amount that some tech players are spending on AI hardware and data centre buildouts. Could the CapEx cap upside for the rest of the year and perhaps a bit longer? It’s impossible to tell, but I do think there are ways to profit from the rise of AI data centres without having to own shares of the companies that are opening their wallets to advance the effort.
In this piece, we’ll look at just one very steady green energy play that is doing its part to help power the boom.
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Brookfield Renewable Corp.
Brookfield Renewable Corp. (TSX: BEPC) is really starting to heat up, with shares gaining close to 5% on Wednesday, just shy of the $60 per-share mark. The stock has risen over 7% in the past week alone, and while it’s difficult to tell if the latest spike is the start of a sustained move back to prior highs, I do think that the renewable energy powerhouse is a terrific way to play the boom at a fairly reasonable price of admission.
Brookfield Renewables has a big deal in place with Microsoft for work on producing 10.5 gigawatts (GW) worth of renewable energy capacity. Undoubtedly, that’s a lot of clean power that may very well set the standard for the hyperscalers as they look to scale up their AI builds without having to drain the grid or emit a considerable amount of carbon into the atmosphere.
Any way you look at it, Brookfield Renewable is on the right side of a powerful structural tailwind. Add other hyperscaler green energy deals and projects to benefit from the nuclear energy boom, and perhaps investors have a better, steadier, and more bountiful way to play AI from the energy side.
The bottom line
Whether you’re looking for the Canadian corporation with Brookfield Renewable Corp., which pays cash dividends, or you’re fine with betting on the partnership with Brookfield Renewable Partners (TSX: BEP.UN), which sports a higher 4.8% yield at the time of this writing, I think there are many ways for investors to play the AI-driven green energy boom.
As the firm looks to expand its asset base via acquisition, I’d be inclined to stay the course with the name, even through the big bumps in the road that are sure to appear, especially after the latest spike.
