Businesses from a variety of sectors have changed course to capitalize on the AI trend.
This week, Nvidia promoted its new Vera Rubin portfolio, highlighting processors that are more potent and energy-efficient than its predecessors.
However, this does not imply that processors use less energy simply because they are more efficient. The chips will need significantly more power since they will be so much more capable than they were previously, which will exacerbate the electricity shortage that already affects the major artificial intelligence players.
According to Matthew Sallee, head of investments at Tortoise Capital, “a couple of years ago, it was all about the chips being the gating factor,” BourseWatch said. “That has pivoted, and now it’s really about getting electricity.”
His company, which manages funds such as the Tortoise AI Infrastructure ETF TCAI, sees significant potential in investing in several infrastructure components that serve as the foundation of artificial intelligence. Although they may not be as rare as power, technologies like fiber and cooling supplies are in high demand as businesses try to remodel older data centers and include redundancies into their operations to prevent downtime.
These eight equities can be used to profit from a variety of infrastructure and energy trends that support the AI growth.
Putting money into more than just the obvious AI plays
Sallee proposes experimenting with the idea of AI being the next industrial revolution by investing in shares of a company that has been around for a century. He enjoys Modine Manufacturing (MOD), which began as a manufacturer of automobile radiators before shifting its focus to include liquid cooling solutions for data centers.
Shares of Modine haven’t moved much in the last year, and their 2026 start has been rocky due to remarks made by Nvidia (NVDA) indicating that its new processors won’t require “chillers” like Modine’s. “Chips will continue to get more efficient but also more powerful, leading to total cooling needs growing,” Sallee added, indicating that those concerns are unfounded.
Sallee believes that investors taking gains after a three-year run of more than 500% contributed to the 11% decrease in Modine shares since Monday’s closing. He sees “significant equity upside” because cash flow should expand at a midteens annual rate and the stock is trading at 11.5 times next year’s earnings before interest, taxes, depreciation, and amortization (Ebitda).
Additionally, he supports bitcoin mining firms TeraWulf (WULF) and IREN (IREN), both of which have seen changes of their own. The businesses, such as CoreWeave (CRWV), have discovered that they can convert bitcoin mining capability into data center jobs.
“You mine when the power is cheap and you don’t mine when it’s not,” Sallee explained in reference to bitcoin. However, he pointed out that data center hosting requires round-the-clock operations, which means businesses must invest heavily in adapting their processes to the new reality.
The availability of space has been another problem in the construction of the data center. IREN Chief Commercial Officer Kent Draper told BourseWatch in November that IREN has available capacity today and is expanding it through land and power arrangements it has secured because of its early advantage as a cryptocurrency miner.
Sallee said that despite recent strong rallies, the companies still trade at single-digit multiples of enterprise value to the expected Ebitda for next year, making them appear inexpensive. The companies have “massive rerating potential,” which means their stocks might fetch greater multiples, “to the extent that they can sign contracts with hyperscalers” or other parties.
Sallee prefers Williams (WMB), a natural gas business whose pipeline provides natural gas to a large portion of the East Coast, among power plays. They have discovered an economic opportunity in serving data centers by stacking many of their compressions, which it turns out can also generate power.
“The hyperscalers are willing to spend the money and basically guarantee their revenues, and they’re earning tremendous returns,” he stated.
According to Jeffreys analyst Julien Dumoulin-Smith, who wrote on Friday that he is “increasingly bullish” on the company’s power-generation segment, Williams’s stock is his top midstream pick for the year. “Power innovation remains in the early innings,” Dumoulin-Smith remarked.
The stock of ProPetro Holding (PUMP), an oilfield services company, is currently trading at 5.5 times the enterprise value of Ebitda for the upcoming year. Although the stock doesn’t quite deserve to trade at the 15.5 multiple of generator company Generac, “we see significant rerating potential based off growth and multiple improvement as they execute on growing the power business,” according to Sallee, there aren’t many comparisons among peers due to the distinctive business mix.
Independent, unregulated utility providers like Constellation Energy (CEG) and Vistra (VST) are concentrating on maximizing current facilities while interest in alternate energy sources like nuclear power increases, according to Sallee. His favorite is Constellation, which drew his attention in 2022 when it appeared that the company might be eligible for the nuclear-production tax credit, which promotes sustainable energy. He clarified that the credit ensures a minimum price for power by implementing a price floor.
Constellation has “significantly derisked their business,” according to Sallee, because it is unregulated and sells into the wholesale market, which is why the loan guarantees rates that the company receives for nuclear energy.
Reserve margins, a measure that accounts for additional power-generating capacity above the peak load, are what he is keeping an eye on. “It basically is a measurement of, ‘Can we keep the lights on when conditions get extreme?'” Sallee spoken.
In a few years, reserve margins are expected to drop to the point that the big regional transmission organizations in Texas and along the East Coast may have to pay for additional power to keep the lights on, which would probably improve pricing trends, according to Sallee.
While Friday’s announcement of a new agreement between Oklo (OKLO) and Meta Platforms (META) excited nuclear-energy investors, it’s important to consider all that will be needed when nuclear energy becomes more in demand due to artificial intelligence. For example, Amentum (AMTM) is a corporation that contributes to the ongoing debate about where and how to bury nuclear waste.
According to Sallee, “the nuclear-waste business has long-duration Department of Energy contracts where it operates and cleans up legacy nuclear sites,” which cover everything from transportation to permanent disposal to waste classification.
