Artificial intelligence (AI) may live in the cloud, but the cloud runs on steel, copper, transformers, and electricity. Canada needs to roughly double its power grid by 2050 as AI data centres, electric vehicles, industry, and electrification push electricity demand higher. Those data centres won’t run without some serious investment.
That’s the real story behind the $1 trillion data centre buildout estimated by Canada. Data centres need substations, grid upgrades, backup systems, cooling, and specialized electrical equipment before a single server can hum. That’s where the next wave of wealth could form. And one Canadian company sits right in the middle of that physical AI boom.
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HPS
Hammond Power Solutions (TSX: HPS.A) looks like one of the clearest ways to invest in the data centre boom without buying another chip stock. The tech stock makes dry-type transformers, power quality products, and custom electrical equipment. That may sound less exciting than AI, but every giant data centre needs reliable power before it can run a single model.
That demand keeps growing. Canada recently laid out a $1 trillion plan to double electricity grid capacity by 2050, with AI data centres, industrial growth, and electric vehicles all pushing power needs higher. That’s a massive shift. It also shows why investors shouldn’t only focus on the companies building the software. The infrastructure behind the software could create some of the better long-term winners.
Data centres strain power systems in a way older commercial buildings never did. These facilities need huge, steady electricity loads. They also need equipment that can manage power safely and efficiently. Transformers sit at the heart of that. Without them, electricity doesn’t move through the system properly.
That gives Hammond a practical role in a huge trend. It doesn’t need to guess which AI app wins, but just needs customers to keep building power-hungry facilities, upgrading grids, and replacing electrical equipment. So far, the numbers suggest that demand has already reached its order book.
Into earnings
In the first quarter of 2026, Hammond reported record sales of $265 million, up 31.5% from last year. Management pointed to strength in custom product shipments and data centre-related activity. Backlog also sat 94.6% higher than a year earlier.
If Hammond can keep expanding production, manage supply chains, and ship into that growing backlog, revenue could keep climbing. Data centre demand also tends to favour suppliers with proven products and delivery credibility.
There’s also a valuation lesson here. Hammond stock already climbed a lot, so investors shouldn’t treat it like a secret. At writing, it trades at 58.6 times earnings. A strong business can still become risky if expectations get too hot. If data centre orders slow, margins compress, or backlog growth fades, the tech stock could pull back hard. Small industrial stocks can move fast when sentiment changes.
Foolish takeaway
Still, Hammond has something many AI-adjacent stocks lack. That’s real sales, real demand, and a direct role in the physical buildout. It sells the kind of equipment that data centres need before the servers arrive. That makes it a useful Canadian stock for investors who want the infrastructure side of the AI trade.
The best part is that the story doesn’t depend on a perfect tech forecast. Even if AI spending cools for a while, power demand from industry, electrification, and grid upgrades still supports Hammond’s broader market. Data centres add another high-growth layer to that base. What’s more, Hammond offers up a dividend to help investors while they wait for any rebound. Even $7,000 can bring in quite a lot.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| HPS.A | $322.50 | 21 | $1.10 | $23.10 | Quarterly | $6,772.50 |
For investors willing to handle volatility, Hammond Power Solutions looks like one Canadian company set to benefit from the trillion-dollar power buildout. Chips may get the spotlight. But the money also flows to the companies making the electrical backbone work. Hammond sits close to that backbone, and that’s exactly why this stock deserves attention today.
