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Investors are backing companies that build and power data centers, from generators and steel to cooling and cabling, as AI spending grows.
In short: Investors are putting more money into industrial companies that supply the physical parts needed to build AI data centers.
Building and running AI systems is driving a rush to construct more data centers, which are large buildings filled with computers that run day and night. As this construction grows, investors are looking beyond software companies and chip makers and toward the firms that provide the “picks and shovels” for the build-out (like selling tools during a gold rush).
The Financial Times found that more than 200 publicly listed companies tied to data center or semiconductor supply chains have beaten the MSCI World Index over the year ending June 9. The MSCI World Index, a broad measure of global stocks, rose more than 21% in that period. This outperformance held even after a recent sell-off in some tech and AI-related stocks linked to worries about interest rate rises.
Examples include Caterpillar, which is supplying generators for data centers, and German engineering and construction firm Hochtief. Steelmaker Nucor pointed to “white hot” AI demand, and Ford’s shares jumped in May after it said it would shift its electric vehicle plans toward battery storage for data centers.
The demand is not just about buildings. AI data centers need huge amounts of electricity, plus cooling to stop chips from overheating and high-speed connections between machines, which boosts demand for copper wiring, optical fiber cabling, and power equipment. The article points to companies like Corning for fiber optics and Eaton and Legrand for power systems, along with utilities signing major power deals.
A key question is whether today’s spending pace can last, since a small number of big tech firms are driving much of the build-out. Consultants at Bain estimate the tech industry would need to generate about $2 trillion a year in AI revenue to justify current data center spending trends. Rising energy prices and any slowdown in AI investment could also hit these supplier companies.
Source: Financial Times
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