The biggest winners from AI may not be tech companies but the picks-and-shovels suppliers behind them

A growing number of firms are riding AI’s coattails: More than 200 industrial, utility, and mining companies linked to data centers or semiconductor supply chains outperformed the MSCI World Index over the past year, the Financial Times reports. The gainers include everyone from Caterpillar and Hochtief to steel producer Nucor and power-management company Eaton.

“[A]nything that can spin an engine is going to end up in a data center,” Dell’Oro’s Alex Cordovil said. Investors are increasingly wagering on the infrastructure behind AI — companies supplying the power, cooling, wiring, and equipment — rather than the companies building the models themselves.

This comes as spending on data center infrastructure is hitting record levels: Alphabet, Microsoft, Amazon, Meta, and Oracle are projected to spend a combined USD 700 bn on AI infrastructure this year alone, helping push US data-center construction spending to a record USD 50 bn this past April. Global data-center capacity is expected to double by 2030.

The biggest winners aren’t always obvious: Corning — the 175-year-old company behind Pyrex glass — has seen its shares rise more than 270% after signing optical-fiber agreements with Meta and Nvidia. Eaton reported data-center orders were up 240% in 1Q, while gas turbines once considered obsolete now carry backlogs of up to seven years as AI companies scramble for power.

Gulf investors are also putting their money into these enterprises: The Abu Dhabi Investment Authority (Adia) has recently capitalized on the USD 2.4 bn IPO of German gas-engine maker Innio, whose equipment helps power AI-era data centers. The stock jumped 23% on its Nasdaq debut, underscoring investor appetite for the infrastructure underpinning the AI boom.

The catch: Bain estimates the tech industry would need to generate USD 2 tn in annual AI revenue to justify the spending trends we’re currently seeing. The OECD has also warned of a potential repricing of AI assets if geopolitical tensions keep energy prices elevated. For now, though, investors seem happy backing the businesses building the AI boom.

MARKETS THIS MORNING-

Asia-Pacific markets fell in early trading this morning as flaring geopolitical tensions and Wall Street's tech selloff rattle investors. South Korea’s Kospi was leading losses, down 2.6%, and Japan’s Nikkei was down 0.9%. The Shanghai Composite and Hang Seng also opened lower. In the US, equities are expected to open in the red, with futures down.

The values in the table above are listed according to the market position as of 3:30pm IST / 2pm GST.