The data centre boom needs more than chips. Investors love the glamorous side of artificial intelligence. They watch the cloud giants spend staggering sums on servers and software. But every new data centre also needs power. Lots of it. That’s where Hammond Power Solutions (TSX: HPS.A) enters the picture.
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HPS
Hammond makes dry-type transformers, power quality products, and related electrical equipment. These products help move and manage electricity inside buildings, factories, utilities, renewable projects, and data centres. So while many investors hunt for the next AI software winner, Hammond sells the kind of equipment the buildout can’t skip.
The timing looks strong. Data centre electricity demand keeps climbing as companies race to train and run AI models. The International Energy Agency expects global data centre electricity use to roughly double from 2025 to 2030. Goldman Sachs Research also expects U.S. data centres to take a much larger share of peak summer power demand over the next couple of years. That creates a simple bottleneck. You can’t build digital infrastructure without electrical infrastructure.
Into earnings
Hammond already sees that demand in its numbers. In the first quarter of 2026, the company reported sales of $264.8 million, up 31.5% from the same period last year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) climbed 32.8% to $41 million, while adjusted earnings per share (EPS) rose 29.7% to $2.08. Those numbers show a business turning data centre and electrification demand into real revenue.
The backlog looks even more exciting. Hammond said its first-quarter backlog jumped 94.6% from last year, largely due to large projects driven by data centre activity. Backlog also rose 4.1% from the previous quarter. For a manufacturer, that gives investors a clearer view of future sales
Hammond also spent ahead of the opportunity. The company invested heavily in capacity from 2023 through 2025, with a goal of supporting revenue above $1.2 billion. That expansion should help it serve customers faster. In a market where power equipment lead times can delay projects, speed can become a real competitive edge.
More to come
The company’s acquisition strategy adds another catalyst. Hammond announced a major deal for Micron Industries in April 2026, a move aimed at expanding its capabilities in electrical products. If management integrates it well, the acquisition could widen Hammond’s market reach and deepen its role in North America’s electrification cycle.
There’s also a dividend, though investors shouldn’t buy Hammond only for income. The company raised its quarterly dividend to $0.55 per share earlier this year. The yield remains modest because the stock climbed so much at just 0.33%. Still, dividend growth shows management wants to share cash while funding expansion.
The risk comes from valuation and margins. Hammond’s share price surged as investors caught on to the data centre angle. That means expectations now sit high. Any slowdown in orders, project delays, tariff pressure, or cost inflation could hit the stock hard. In fact, in Q1, net earnings fell even though adjusted earnings improved, partly due to higher expenses and share-based compensation.
Bottom line
Even with those risks, Hammond looks like one of Canada’s clearest data centre buildout plays. It doesn’t need to predict which AI app wins. It sells the electrical backbone the entire boom requires. That can make it a powerful pick for investors who want AI exposure without buying another mega-cap tech stock.
The cash opportunity looks colossal. Hammond already proved it can capture it. Now investors need to decide whether the price still leaves enough room for the next leg higher from here, before momentum gets stretched again and patience becomes as important as optimism.
