While demand for artificial intelligence applications is growing rapidly, some non-tech companies are well-positioned to directly benefit from the AI boom in the coming years, according to Scotiabank. Analysts at the Bank of Canada’s investment banking division suggest that demand for data centers and electricity will soar as AI systems become more sophisticated and pervasive. This is because although GPUs, which are specialized chips that power AI applications, are highly efficient, they consume more than twice as much power to operate compared to non-AI chips such as CPUs. Analysts at Scotiabank named six stocks that they believe could take advantage of the surge in demand for data centers and renewable energy driven by AI applications. “We are bullish about the outlook for the data center industry and expect strong demand growth for Equinix and Digital Realty, driving valuation expansion,” analysts wrote in a Jan. 22 note to clients. I write about secondary effects in my notebook. From growth AI applications. Data center operator Digital Realty predicts that by 2025, the amount of data created and used by businesses will increase by 28% globally from 2020 levels as the use of AI expands across enterprises. Stated. Meanwhile, earlier this week, fellow data center company Equinix launched a new cloud service that allows companies to manage Nvidia AI supercomputing infrastructure to build AI applications. DLR EQIX 1Y Line Scotiabank is particularly enthusiastic about Digital Realty, raising its price target to $155, or a “sector outperform” rating with about 9% upside potential from the current share price. The company’s stock price has increased more than 30% in the past 12 months. “We are well-positioned to generate incremental shareholder value by expanding our ability to meet AI’s insatiable data demands, while also deleveraging our balance sheet by relying on our joint venture partners for new investment capital. “We believe that there is,” the bank said. analysts added. Big tech companies like Amazon, Google, and Microsoft are no exception, announcing multibillion-dollar plans to expand data center capacity in anticipation of AI-driven growth. Scotiabank noted that tech companies are the largest corporate consumers of renewable electricity because of their large, power-hungry data centers. Analysts identified NextEra Energy, NextEra Energy Partners, and Brookfield Renewable Partners as best able to meet Big Tech’s surging power needs with renewable energy.
