Key insights
- The author suggests that companies providing infrastructure for AI data centers (Eaton, GE Vernova, Vertiv) could benefit from the growth in AI, even if the market has already priced in some of the upside. This highlights a potential investment opportunity in the less obvious beneficiaries of the AI boom, suggesting a bullish outlook for these infrastructure providers.
Looking further down the AI infrastructure chain
I’ve been looking at the AI infrastructure theme, but instead of only focusing on the obvious names like Nvidia, big tech, chips and cloud, I’m trying to move further down the chain.
AI needs data centres. Data centres need power. Power needs grid upgrades, cooling, electrical systems, backup power, transformers, switchgear and all the boring stuff that actually keeps the whole thing running.
The three companies I’m putting on my watchlist are.
Eaton — power management, electrical systems, grid/data centre infrastructure. GE Vernova — power generation, electrification and grid upgrades. Vertiv — data centre cooling, power and thermal management.
My rough thesis is that if AI demand keeps growing, the infrastructure underneath it could become just as important as the chips themselves.
I’m not saying these are buys. They may already be fully priced. I’m just trying to understand the second-order plays better.
What do people think of this thesis?
Are Eaton, GE Vernova and Vertiv still interesting long-term plays, or has the market already priced in most of the upside?
Also, are there any other companies further down the AI infrastructure chain worth researching?