Data Centres Are the New Gold Rush: Here’s Where I’d Invest

Alphabet (NASDAQ:GOOG) might be the big steal in the AI data centre boom.

Key Points
  • The AI data-centre buildout is accelerating (including major projects in Canada), but it raises big unanswered questions around power and water use and how much strain it puts on local grids.
  • You can invest in the theme without extreme volatility by using hyperscalers like Alphabet (GOOG), which is positioned to profit from data centres and AI hardware/software and still looks reasonably priced.

AI data centres are going to be built across the continent at quite the quick pace, whether you like it or not. Undoubtedly, the great AI data centre buildout seems to be moving fast enough that there are still quite a few unanswered questions surrounding power, water usage, and all the sort.

Will the AI data centres, which are profoundly power-hungry, be bringing their own nuclear or gas energy plants with them? Or are they going to be a drain on the grid, driving up the price of power for those living in the area?

Indeed, there are immense concerns from those living near proposed data centre projects, but, at this pace, it doesn’t seem like the AI infrastructure of tomorrow can be built fast enough, especially as AI usage and the number of labs sprinting to get to the front of the AI race look to increase.

With the big $13 billion data centre going up in Alberta, it’s clear that the boom is coming to Canada and in a massive way!

Indeed, call it an AI data centre gold rush, if you will, but I do think we’ve reached a point where the theme is impossible to ignore, especially if you’re an investor who’s looking to score some serious growth over the next three to five years. Now, investing in AI data centres doesn’t require you to take on a considerable amount of risk with the neocloud plays that move up or down by 5–10% on any given day. Intense volatility doesn’t have to be par for the course when you’re looking to invest some money in the AI infrastructure of the future.

Google wideshot cc Alphabet

Source: Alphabet

Alphabet stock could become a force in data centres

In my view, there are quite a few under-the-radar kinds of names to play the boom. And with valuations that are still very much reasonable, I do like some of the hyperscaler giants in the U.S., especially Alphabet (NASDAQ: GOOG), which had recently pulled back due to departing AI researchers and delays with its latest Pro-tier model, Gemini 3.5 Pro.

Of course, what makes the shares of Alphabet really stand out at this juncture, at least in my opinion, is that Warren Buffett, the Oracle of Omaha, recently said that it was he who made the decision to invest in the company at his legendary conglomerate. As the company continues to invest heavily in not only Google Cloud, but the next-generation silicon that will be going into its AI data centres powering Gemini, let’s just say I like the company’s chances of making a massive profit from the endeavour, which, I think, has a much clearer path of paying off in the coming years.

Whether we’re talking about Gemini and its role in the AI race or the business it’ll be doing for third parties, which includes the likes of iPhone maker Apple (NASDAQ: AAPL) (that’s a lot of AI demand as Siri AI goes live later in the year), by the way, I do view Alphabet’s Google as possibly the safest and maybe even the cheapest way to bet on the future of AI data centres.

Bottom line

At just 26.4 times trailing price-to-earnings (P/E), shares of GOOG just seem too cheap to ignore, especially given it could rise to become one of the biggest, most disruptive forces in the AI data centre buildout.

Fool contributor Joey Frenette has positions in Alphabet and Apple. The Motley Fool recommends Alphabet and Apple. The Motley Fool has a disclosure policy.

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