The Canadian infrastructure boom is really starting to pick up traction. Whether we’re talking about all the AI data centres that need to be constructed or the essential service providers needed to modernize critical pieces of Canadian infrastructure for the modern era, there are a number of firms to play what I view as one of the more prominent longer-term trends.
Of course, we hear a lot about U.S. data centres and the boom powered by some of the largest, most powerful tech companies on the planet. With the data centre buildout coming north (arguably, it already has), I do think that Canadian investors might wish to consider some of the more underrated names as the picks and shovels start going into the ground.
As the AI revolution arrives in Canada, it’s not just the firms that will build the data centres which will prosper. Indeed, AI compute isn’t just about chips. Energy is a critical ingredient and, as it stands, it’s clear that a lot of firms are going to need to operate power generation and transmission to get the grid where it needs to be to support Canadian AI data centres.
In any case, there are plenty of winners that stand to gain as the Canadian infrastructure boom kicks off, and, in this piece, we’ll have a closer look at two names.
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Brookfield Corp.
Brookfield Corp. (TSX: BN) is perhaps the heavyweight champ when it comes to Canadian infrastructure. The asset manager is a play on the real estate and clean power that support the AI data centres of the future. Indeed, the company’s pivot towards investing in the AI infrastructure boom, I think, was a wise move that could help keep shares of BN running hotter than the TSX Index over the long haul.
Beyond ambitious AI plans, though, Brookfield is also a force in other forms of physical infrastructure, so, in a way, it’s a very cheap basket of cash-generative assets, all in one bundle. In my view, the stock’s getting ridiculously cheap, given the magnitude of tailwinds ahead. If you’re more interested in the landlords behind the AI data centres of the future, rather than just playing chips that go into them, shares of BN stand out as quite intriguing, especially on the recent dip.
BCE
BCE (TSX: BCE) is a traditional telecom firm that’s under considerable pressure. As the firm looks to help Canada build AI data centres of the future, though, I do think that it’s time to change how we view the dividend giant as it looks to play a major part in building a new kind of critical infrastructure.
Of course, it’s expensive to build such AI infrastructure, just like it is for cell towers, fibre networks, and all the sort. And, these days, investors want financial flexibility rather than more spending commitments. While the earlier days could prove painful as investors deal with a growing case of CapEx fatigue, I do think that such AI infrastructure bets will, in due time, pay off in a big-time way.
Perhaps playing the real estate, power, cooling, and cables (that’s where BCE shines) is the way to set up for serious dividend growth in the more distant future. Like it or not, BCE’s investments will, I think, start paying off enough to make it a dividend growth sensation again. With telecom CapEx dipping, I’d argue that the move is quite wise, even if investors don’t like it.
