3 Top Stocks to Buy to Cash In on the AI-Fueled Digital Revolution

Artificial intelligence (AI) is one of the biggest investing megatrends in a generation. The technology requires a tremendous amount of computing power. That's driving the need for more data centers. Those facilities demand an enormous amount of electricity, especially when running AI applications.

This trend plays right into the hands of companies that build and operate infrastructure for data and energy. Three leaders are Brookfield Infrastructure (NYSE: BIPC)(NYSE: BIP), Equinix (NASDAQ: EQIX), and Kinder Morgan (NYSE: KMI), which makes them great stocks to buy to cash in on this megatrend.

Playing both sides of the trend

Brookfield Infrastructure is a global leader in infrastructure. It operates utility, energy midstream, transportation, and data infrastructure assets. The company estimates that about 60% of its funds from operations (FFO) have exposure to the digitalization trend. The Brookfield Infrastructure ecosystem supports increased power and data demand:

Image source: Brookfield Infrastructure.

The company's gas and utility assets are becoming increasingly more valuable in the digital age because data centers will fuel tremendous energy demand in the coming years. Data center power demand will grow from 2% of the world's consumption to almost 10% by 2030 and up to 20% in the United States. Natural gas will be a crucial fuel to supplying the baseload power data centers need for their uninterrupted operations. That's benefiting the company's gas storage operations, which is capitalizing on robust demand for energy security by locking in lucrative long-term storage contracts.

Brookfield Infrastructure is also capitalizing on growing data center demand in its data infrastructure platform. The company has $1.2 billion in projects under way to expand its global data center platform. It also has a large land bank to continue growing that platform. Those and other investments should help Brookfield grow its FFO by more than 10% annually, which should support 5% to 9% annual dividend growth.

Data-powered growth

Equinix is a world-leading digital infrastructure company. It operates over 260 data centers in 72 global markets. The data center REIT leases capacity in its facilities to companies seeking to grow their cloud computing and AI workloads.

The company is investing heavily to meet customer demand. It currently has 54 projects under way in 36 markets, including 15 massive xScale projects. It recently bought a 200-acre land parcel in Atlanta with access to power to build its first multi-hundred-megawatt xScale campus to put it in a better position to pursue large AI workloads.

Equinix expects to invest $3 billion annually through 2027 to expand and maintain its global data center platform. Those investments should help grow its adjusted FFO per share by 7% to 10% annually during that timeframe while driving double-digit dividend growth each year.

Adding fuel to its growth engine

Kinder Morgan is the U.S. leader in natural gas infrastructure. It has the country's largest natural gas transmission network, which moves 40% of its natural gas production, and is a leader in gas storage, accounting for 15% of U.S. capacity.

The company's assets are growing increasingly more valuable as demand for gas grows. Meanwhile, rising gas demand is opening the door to new expansion opportunities. Kinder Morgan recently approved a $1.7 billion pipeline project to expand gas supplies in the Southeast to support rising demand from power producers and gas distribution companies. The project is part of its $5.2 billion backlog of commercially secured expansions, the bulk of which support natural gas demand.

Those projects should give Kinder Morgan the fuel to grow its cash flow and dividend. The pipeline giant offers a big-time payout, with more than a 5% dividend yield, and has increased its payment for seven straight years.

Great ways to cash in on the AI infrastructure boom

The world will need to invest a massive amount of capital to expand its infrastructure in support of AI. It will require new gas pipelines, gas-fired power plants, data centers, and data transmission infrastructure. These catalysts will help drive accelerated growth for Brookfield Infrastructure, Equinix, and Kinder Morgan in the coming years. That makes them great stocks to buy for those seeking a way to cash in on the AI-fueled infrastructure boom.

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Matt DiLallo has positions in Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, Equinix, and Kinder Morgan. The Motley Fool has positions in and recommends Equinix and Kinder Morgan. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.