Growing demand for generative AI has sent stock prices soaring in many AI-related companies, such as chip maker Nvidia and ChatGPT backer Microsoft. Now, RBC Capital Markets has identified three lesser-known companies poised to cash in on the artificial intelligence boom. In a report to clients on March 19, the Canadian investment bank singled out Australian data center operator NextDC, French electrical equipment giant Schneider Electric and British electrical components maker nVent Electric as companies “severely affected” by the rise of artificial intelligence. All three stocks also trade in the United States. At the heart of this booming trend are the massive computing power and energy requirements required to train generative AI models. RBC noted that major cloud companies such as Amazon, Microsoft and Google are equipping data centers (facilities that host computer servers) with tens of thousands of power-hungry artificial intelligence chips, driving demand for infrastructure such as cooling systems and electrical equipment. surge. For Australia’s NextDC, AI-driven growth has translated into a large 1GW project pipeline focused on AI training and inference workloads, according to RBC. To meet this demand, NextDC has announced plans for new data center facilities dedicated to generating AI workloads, including a data center facility in Sydney “designed for AI factories and sovereign AI.” On March 15, RBC analyst Jonathan Atkin raised the price target to $19 per share, with an upside potential of 9.5%. The consensus price target also points to 9.5% upside, according to FactSet. nVent, the maker of electrical components, will also benefit from surging demand for its liquid cooling systems and power distribution units (PDUs), which are critical for supporting artificial intelligence hardware, according to Royal Bank of Canada. The investment bank pointed out that more than 40% of nVent’s data center division’s revenue growth this year is expected to come from liquid cooling and PDUs. RBC analyst Deane Dray expects NVT 1Y shares to remain stable over the next 12 months. Part of the reason is that the company’s stock price has risen an astonishing 72% over the past year. nVent’s shares are up 23% so far this year. Schneider Electric French industrial giant Schneider Electric is another major beneficiary identified by RBC. As big tech companies build artificial intelligence-optimized facilities, the company has seen a sharp increase in orders for data center cooling systems and power distribution equipment. RBC analyst Mark Fielding noted: “Schneider Electric expects growth rates in the data center and networking sectors to continue to exceed 10%, emphasizing the enduring importance of these areas to the company’s overall growth strategy.” Fielding is bearish on the stock, giving a sell rating. The price target is down 23%. The stock has gained 18% this year and more than 45% in the past 12 months. Analysts have a consensus rating of “hold” and a price target of 7.1%, according to FactSet. —CNBC’s Michael Bloom contributed reporting.
