The rise of artificial intelligence is sparking the construction of new data centers, which is providing significant opportunities for investors.
KeyBanc Capital Markets’ research team on Monday shared its top ideas about what companies will benefit from the AI infrastructure trend. The stocks include Wesco International (WCC), Cogent Communications Holdings (CCOI), Teradyne (TER), and Constellation Energy (CEG). All four stocks have Overweight ratings.
“For our names exposed to data center hardware/infrastructure, C2Q24 earnings season largely continued to showcase robust demand trends around the theme,” the team wrote.
Wesco stands to gain because investment spending on data centers should add to demand for logistics services among the company’s cloud-computing and enterprise customers, according to industrial tech analyst Ken Newman. He has a target of $195 for the stock price, while shares were down 0.9% to $157.46 on Tuesday afternoon.
Communications services analyst Brandon Nispel is optimistic about Cogent’s data-center connectivity solutions, including its optical wavelength services, which provide data transportation across long distances. He has a $80 price forecast for the shares; the stock was up 0.5% to $76.11.
Semiconductor capital-equipment analyst Steve Barger said Teradyne’s testing services will thrive as demand for AI chips grows. And electric utilities analyst Sophie Karp is bullish on Constellation Energy because of rising electricity demand from data centers. Barger has a $180 target for Teradyne and Karp has a $230 price forecast for Constellation.
Teradyne stock dropped 1.5% to $132.01. Constellation stock was down 1.1% to $190.58.
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