Large tech companies, corporations, and utilities are projected to invest approximately $1 trillion in capital expenditures to support the advancement of artificial intelligence (AI) in the coming years, as estimated by Goldman Sachs. This surge in AI adoption necessitates data centers, semiconductors, and significant power consumption. Brookfield Infrastructure, a global infrastructure company, is well-positioned to capitalize on this trend, given its operations in utilities, gas pipelines, and data centers, as well as its involvement in building new semiconductor capacity. Moreover, the company boasts substantial access to capital, enabling it to assist other firms in supporting their AI investments.
In the second-quarter earnings release, Brookfield Infrastructure’s CEO, Sam Pollock, expressed optimism about the company’s growth prospects, stating that the surge in AI adoption is generating substantial capital deployment opportunities across their data, electric utility, and natural gas sectors. This favorable outlook could fuel further expansion and contribute to the company’s nearly 4.5%-yielding dividend.
Brookfield Infrastructure has strategically shaped its portfolio of operating companies around three major investment themes: decarbonization, digitalization, and deglobalization, referred to as the “three D’s.” By divesting businesses that do not align with these themes and reinvesting the capital into new ventures that capitalize on one or more of these megatrends, the company aims to reap significant dividends in the coming years.
Pollock highlighted the increasing number of companies turning to Brookfield to support their AI ambitions. These companies require additional data center capacity, energy supply, and capital solutions, all of which Brookfield can provide. Notably, the company has partnered with Intel to fund the construction of two new semiconductor fabrication plants in the United States, further enhancing its AI-related investments.
Brookfield Infrastructure has already witnessed AI-related investment opportunities emerging. The company expects strong leasing activity across geographies, driven by artificial intelligence investments and the growing need for processing and storage capacity. In Europe, the company plans to expand its data center platform from 300 megawatts (MW) to over 725 MW within its existing footprint. Additionally, it recently acquired land in Athens to support a 30 MW facility. In the United States, Brookfield’s data center platform currently has 235 MW of operating capacity, with plans to expand it to over 1.1 GW in the coming years.
These data center investments are just a fraction of Brookfield Infrastructure’s $7.7 billion backlog of organic expansion projects. The company also aims to invest in semiconductor infrastructure and expand its natural gas infrastructure to meet the increasing demand for electricity generation.
In addition to its robust organic growth drivers, Brookfield Infrastructure anticipates that mergers and acquisitions (M&A) will further accelerate its growth. With a healthy global economy and falling interest rates, the company foresees increased M&A activity in the latter half of this year. As companies seek capital to fund their AI-related investments, Brookfield is well-positioned to capitalize on this environment due to its strong access to capital.