Updates with post on industrial, materials names that may benefit from the AI boom
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AI'S ENDLESS APPETITE MAKES INDUSTRIALS THE MAIN DISH The search for the 'picks and shovels' of the AI boom is just becoming wider, with analysts at BCA Research identifying a number of industrial and materials stocks that are expected to benefit.
The expansion of AI-driven computing is igniting a powerful new industrial cycle, with capital goods and materials suppliers—ranging from turbine makers to advanced cooling and grid component manufacturers—positioned as key beneficiaries in the data center value chain, BCA Research said.
BCA's curated basket of data center infrastructure companies has outperformed both the S&P 500 Capital Goods index and the broader market, combining earnings growth potential with more reasonable valuations than traditional AI leaders.
First in BCA's basket are those that are involved in the construction of the centers, such as mining giant Caterpillar CAT.N and equipment maker Quanta Services PWR.N.
It also involves scores of wiring and cabling areas in which companies such as Linde LIN.DE and Ecolab ECL.N are experts, according to the brokerage.
Hyperscalers are known to consume enough energy to power small cities, and so power generation and management companies like GE Vernova GEV.N, Eaton ETN.N and Schneider Electric SCHN.PA are the likely winners in this segment, BCA said.
Efficient processing of AI workloads also requires a cool working environment, and that's where those involved in thermal management come in. BCA's top picks include Trane Technologies TT.N, Vertiv Holdings VRT.N, and Pentair PNR.N.
"Data center infrastructure represents a strategic, long-term investment theme," Irene Tunkel, chief strategist at BCA Research, said, adding that the theme allows investors to participate in the secular upside of the GenAI build-out while limiting exposure to the risks of an AI bubble.(Akriti Shah)
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