Once-in-a-generation investment opportunity: 1 AI stock to buy now

Many people refer to data as the new oil. The digital economy operates on data. Information is critical to digital technologies, especially artificial intelligence (AI) applications. This means the world needs more infrastructure to support the movement and processing of data.

“We are currently in a once-in-a-generation investment cycle for data centers,” said speaker Felix Chan. brookfield infrastructure‘s (BIPC -0.78%) (BIP -1.24%) Last year’s annual investor day. Zhang noted that businesses will need to invest more than $1 trillion in data centers over the next 10 years to support increased data consumption. Generation AI. Brookfield Infrastructure has invested significantly in building a leading data infrastructure platform to take advantage of this opportunity. That makes it a top stock to buy now to take charge of the coming AI-driven data center boom.

AI runs on data

Uday Matialagan, head of Brookfield’s global data center platform, said at the same event:

AI is everywhere, and the growth of machine learning and AI is truly exploding. There are many theories and views on how AI will emerge and how it will be deployed. But one clear truth is that the only way AI can be delivered is through physical data infrastructure on the ground. What that means is data centers and a lot of that.

AI technology requires huge amounts of computing power and data storage, so data centers are needed for AI to succeed. Its computing power comes from specialized semiconductors developed by companies such as: Nvidia (NVDA 3.12%).AI apps, including the very popular AI ChatBot Chat GPT by OpenAI, we use H100 graphics cards extensively. Companies are hoarding these chips to fuel their AI ambitions. Nvidia’s data center business generated $18.4 billion in revenue in the fourth quarter, a staggering 409% increase over the previous year.

The AI ​​boom is also prompting companies to set aside more space in their data centers to house the technology used to train AI models and generate output. That’s spurring a building boom that could last more than a decade. According to Brookfield’s Chan, the world will need 6 gigawatts (GW) of additional data center capacity over the next three years to meet projected data demand. This is impressive considering that it only had 7.4 GW of online capacity at the end of last year.

Build a cutting-edge data center platform

Brookfield Infrastructure has been quietly positioning itself to take advantage of the data and AI boom of the past few years. The company entered the data center market in his 2019 year. The global infrastructure operator spent $1 billion to purchase a portfolio of data centers. AT&T In the US, we are building the Evoque data center platform. The company also joint venture (Joint venture) Data Center REIT digital realty In the same year, it acquired the Ascenty data center platform in South America and later formed another joint venture with Digital Realty to develop data centers in India.

The company invested in three more data center platforms last year.

• compass data center: The company partnered with existing investors to acquire Compass in a $5.5 billion deal. Compass is developing mega data center campuses in North America.
• Data 4: It acquired Data4 for $3.8 billion and entered the European data center market. The company operates 31 data centers in six European countries.
• Kixtera: Brookfield used the Evoque platform to acquire 40 data center sites from Cyxtera out of bankruptcy. We also purchased related properties for several of our sites from third-party landlords, including Digital Realty.

Brookfield currently owns interests in more than 135 operating data centers in the Americas, Europe, and Asia Pacific. It has a critical load capacity of 750 megawatts (MW).

In addition, the company has contracts to support the construction of an additional 900 megawatts of data center capacity over the next three years. This pipeline provides Brookfield with a clear footprint to increase operating capital for its data center platform (FFO) will increase 2.5 times over the next three years. Meanwhile, the company has the potential to develop more than 2.3 million kW of data center capacity over the next five years and is purchasing more land to support future development. For example, Brookfield Infrastructure acquired strategic land in Milan in the fourth quarter of last year to support over 60 MW of additional capacity after discussing growth goals with customers.

strong growth driver

Brookfield Infrastructure’s data center investments could yield significant returns for investors in the coming years. These support the company’s view that it can grow FFO per share by more than 10% annually. This should give it the power to increase its already attractive dividend (currently yielding 4.7%) by 5% to 9% annually. Adding dividend income to the profit growth rate, Brookfield’s annual gross profit could reach the mid-teens, with further upside as the market begins to factor in Brookfield’s AI-powered growth potential. is also expected. These factors make the company a great AI stock to buy and hold for the long term.