AI data centres: They are the future, or so the tech sector thinks.
This year, the largest tech companies are expected to spend $700 billion on property plant and equipment (PPE). Much of that is going to AI data centres.
Why data centres?
Because they are where AI “lives.” When you ask ChatGPT or any other AI app to answer a question for you, the answer isn’t given by “the internet,” but by an AI running on NVIDIA (NVDA) hardware, located in a data centre somewhere. Hundreds of billions of dollars are being spent on such data centres, without which the miracle of modern AI wouldn’t have been possible.
As it turns out, Canada is one of the best places to build data centres. The country’s relatively cool climate lessens the cost of cooling data centres there, while its proximity to the U.S. provides advantages in catering to U.S. tech companies. In this article, I will explore the opportunity in AI data centres and why Canada could be among the companies best positioned to profit from it.
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AI data centres: The opportunity
AI data centres are among the biggest opportunities for profitable capital deployment today. $600 to $700 billion is expected to be spent on AI data centres this year, based on big tech companies’ 2026 guidance. The market size is expected to grow from $21.27 billion to $133.5 billion by 2034, a compound annual growth rate of 25.8% (the apparent discrepancy between $700 billion now and $133.5 billion in 2034 comes down to capital expenditures vs revenue). So, this is an enormous growth opportunity. The question is, who is best positioned to profit from it?
Canada benefits
Canada is positioned to profit from the AI data centre revolution in several ways:
- Canada has a cool climate. This is an advantage in operating AI data centres, as it naturally reduces cooling costs.
- Ample energy sources. Canada has ample traditional and renewable energy sources, both of which are key to powering AI data centres. In less resource-rich regions, the powering of AI data centres is becoming an issue. Canada’s Brookfield Renewable Partners is already supplying renewable power to U.S. tech companies; bringing data centres to Canada seems like only a natural extension of that.
- Proximity to the United States. Canadian data centres can serve clients in the U.S., a country with some of the world’s biggest tech companies (hyper-scalers) as well as regular companies looking to utilize AI.
For these three key reasons, Canada is perfectly positioned to profit off the AI data centre boom.
One Canadian company already making moves
One Canadian company already making moves in the AI data centre space is Brookfield Infrastructure Partners (TSX: BIPC)(TSX: BIP.UN). The company is making big data centre investments, in Canada, the U.S. and abroad.
Brookfield Infrastructure Partners invests in all kinds of infrastructure: telco towers, pipelines, toll roads, and more. This year, the company is especially focusing on AI data centres. Some recent AI infrastructure projects have included:
- A $100 billion data centre project with Kuwait.
- The Radiant data centre project, which will see Brookfield Infrastructure build “AI factories” based on NVIDIA designs.
- A wholly owned portfolio of 150 data centres across Canada and the United States.
Brookfield Infrastructure is already a big player in AI data centres. With the capital it has at its disposal, and maybe with some incentives from the Federal Government, it can ensure that Canada gets a reasonable piece of the physical pie.
