The wave of artificial intelligence (AI) has passed its hype. While still an interesting area for investment, every major language model, real-time analytics app and network requires power, computing, cooling, data centers, energy supply and connectivity. That’s why the real money now isn’t with the flashy AI makers; it’s in the pipes that keep the AI running.
That’s why AI infrastructure should be on every Canadian investor’s radar today. It’s not a simple issue, but it has support both abroad and at home, with Canada offering a $705 million program to build sovereign AI computing systems. But if there’s one company that could seriously benefit from it, it’s that Brookfield Infrastructure Partners (TSX:BIP.US).
About BIP
Let’s first look at what BIP is doing, because AI isn’t the only reason the company exists. This Canadian stock is a global infrastructure manager. The company owns and operates long-lived assets in four main segments, namely utilities, transportation, midstream and data.
Yet all of these areas are connected to AI in one form or another, whether it is utility power transmission lines, product transportation, midstream power, or of course the data segment with fiber optic networks and telecommunications towers. That’s why BIP sells itself as one of the relatively rare pure play infrastructure investments.
In income
The company’s success is supported by strong recent earnings figures. The second quarter brought three new acquisitions, which management also said generated substantial revenue through asset sales. In the second quarter, net income rose to $69 million from $8 million the year before, and cash from operations to $638 million from $608 million.
The increase was due to a combination of strong organic growth above target, and contributions from acquisitions completed over the past year. In addition, there were some inflation-related rate increases in the utility and transportation sectors. Additionally, the company stated that it is commissioning more than $1.5 billion in new capital projects.
What to watch
Of course, the company is already successful thanks to its investments in these other energy areas. However, the data arm presents a hugely successful opportunity. The company therefore offers exposure to core infrastructure with lower volatility And growth through data and telecom infrastructure – all of which will determine increasing priorities in a digital and AI-driven economy.
All in all, owning BIP lets investors participate in the global infrastructure expansion while denominated in Canadian dollars. The data segment is expanding rapidly, and as demand for AI, cloud and 5G continues to increase, these assets can all be key growth providers. It’s also a hedge against inflation through long-term contracts, making the company a solid investment any way you look at it.
In short
AI is here and expanding. However, the infrastructure to support this new reality must keep up – not just in Canada, but around the world. Therefore, companies that have a solid reputation in this area will need to get on board quickly.
That makes BIP such an easy solution. It is already a strong investment when it comes to the solid infrastructure we have been using for decades. Meanwhile, it now has a brand new opportunity to create more growth, while being supported by years of revenue. So if you’re looking for a solid investment in AI infrastructure, this stock has it all.
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