If you ask me whether it’s too late to invest in artificial intelligence (AI), I’d say investors may simply need to look beyond the companies getting most of the attention. AI needs enormous computing power, and all those new AI data centres also require transformers and other electrical equipment to keep that power flowing reliably.
That’s exactly where Hammond Power Solutions (TSX: HPS.A) plays an increasingly important role. This Guelph-based company is already seeing data centre demand translate into stronger shipments, especially in the United States.
Let me explain why Hammond Power could continue cashing in on the AI-driven data centre boom even after its spectacular stock-price rally in recent years.
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Why Hammond Power stock looks attractive
First, let’s take a closer look at the role HPS plays in the growing data centre power market. The company mainly makes dry-type transformers, power quality products, related magnetics, and power conversion systems used across electrical infrastructure and industrial applications. Its products serve several markets, including data centres, oil and gas, mining, commercial construction, and wind power generation, making its business diversified.
At the time of writing, HPS stock closed at $279.22 per share with a market cap of $2.5 billion. Its shares were up 75% year to date and 128% over the previous year. At this market price, the stock also offered an annualized dividend yield of about 0.4%.
There are plenty of reasons that have helped the stock surge of late. For example, HPS was recently included in the 2026 TSX30 ranking for the third consecutive year. The ranking recognizes the Toronto Stock Exchange‘s top performers based on dividend-adjusted share price performance over three years.
Now, let me highlight some more key fundamental factors behind its recent rally.
Growth is showing up in the numbers
Notably, the AI data centre boom is already making a noticeable difference in HPS’s financial performance. In the second quarter of 2026, the company posted record sales of $324.8 million, up nearly 45% year over year (YoY). Its sales from the U.S. and Mexico jumped 73% YoY with the help of higher data centre shipments, modest improvement in industrial markets, and better price realization.
Demand for its products also remains strong beyond current shipments. At the end of the latest quarter, HPS’s backlog was nearly 97% higher than a year ago, mainly because of large project orders linked to data centre activity.
On the profitability side, the company’s gross margin reached 31.5% in the June quarter, compared with 30.7% a year ago. Pricing actions, a stronger mix of custom products, and operational improvements helped expand margins.
More capacity for the AI data centre boom
I expect the next part of Hammond’s growth story to be driven by its focus on increasing manufacturing capacity to keep up with demand.
In September, the company signed a long-term lease for a new manufacturing facility in Fort Worth, Texas, with production expected to start in stages during the fourth quarter of 2027.
Once the initial phase begins operating, HPS expects the site to add about $250 million in annual manufacturing capacity. To equip and commission that first phase, the company plans to invest roughly $50 million.
More importantly, depending on market demand and additional investment, the Fort Worth site could eventually support about $400 million in annual manufacturing capacity. This location should also bring HPS closer to important U.S. customers and shorten delivery distances for certain products.
Foolish bottom line
Clearly, Hammond Power stock has meaningful exposure to one of the biggest infrastructure trends in the market today.
With AI data centre activity already boosting shipments and backlog, the company’s capacity expansion could give it more room to benefit as that demand continues to grow, making it an attractive buy-and-hold stock.
