The stock market has been incredibly resilient despite the brief summer setback that some investors may have thought would end in a correction of sorts. Undoubtedly, the artificial intelligence (AI) stocks have had a run, and eventually, they’re going to run into a wall.

Though many AI stocks skid a bit as investors pulled the brakes on their positions, some of the most influential ones — take Nvidia (NASDAQ:NVDA), which made a new all-time high on Thursday alongside AI peers on the back of incredible results from Taiwan Semiconductor (NYSE:TSM) — seem ready for another sizeable leg higher.

Of course, only time will tell where we truly stand in the AI cycle. Regardless, it’s times like these when many retail investors are inclined to “chase” the momentum again when it can pay to play some defense. The utility firms stand out as great indirect ways to play the AI boom.

Key Points About This Article

• Watch for the AI wave to act as a tide that lifts more boats in the utility and infrastructure scene.
• Brookfield Infrastructure stands out as an underrated, undervalued AI beneficiary as it bets big on the data center.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

The AI data center boom is here. Utility firms are positioned to benefit.

With markedly improved AI models (think GPT-5 or event AI agents) comes the need for semiconductors and, with that, power-hungry AI data centers, some of which may tap into nuclear power via small modular reactors (SMRs).

Over the past few weeks, we’ve witnessed some Magnificent Seven firms doubling down on such SMRs to power their data centers of the future. As you’d imagine, the news has been a boon for the utility firms with skin in the nuclear energy game.

It isn’t just the power plays with nuclear ambitions that could gain over the long run from increased demand for power, though. Some of the lesser-loved, higher-yielding utilities also have plenty to gain as the world becomes hungrier for up-to-speed infrastructure with every significant advancement in AI.

In this piece, we’ll look at fairly cheap, higher-yielding utility stocks that have the love of Wall Street analysts. At writing, shares seem like a less-choppy way to keep betting on the markets and the ongoing AI boom, which may very well be back to racing forward following Taiwan Semiconductor’s confirmation that AI demand isn’t about to implode anytime soon.

Brookfield Infrastructure Partners

Brookfield Infrastructure Partners (NYSE:BIP) is a Canadian firm that owns and operates numerous cash-flow-generative infrastructure assets. It’s not a traditional utility firm per se. That said, many of its alternative assets generate cash in a steady, utility-like fashion. Given such utility-like characteristics and its strong growth profile, it’s not a mystery as to why much of Wall Street is such a big fan of the name as the stock comes roaring back.

The company is incredibly well run and has a fair admission price (0.83 times price-to-sales (P/S)) and, most enticing, a 4.53% dividend yield. It’s been a rather rough ride for shares of BIP in recent years. The stock shed nearly half of its value from its 2022 peak to its 2023 trough before ricocheting sharply to $36 and change, where shares sit today.

With plenty of newfound momentum to get behind and a promising strategy to dive deeper into data centers, the utility stock stands out as a hidden gem for value investors seeking medium-term upside. Notably, BMO Capital analyst Devin Dodge, who has a buy rating on the name, is a fan of the Brookfield Infrastructure asset portfolio and the firm’s ability to grow via M&A.

Brookfield’s betting big on AI data centers

Indeed, the firm has been ramping up in acquiring and investing in data center plays to increase its exposure to the ongoing AI boom. If data centers mark a “once-in-a-generation investment cycle,” as management believes, Brookfield seems to be sprinting in the right direction.

Of course, Brookfield Infrastructure is far from a data center pure-play, with a wealth of infrastructure assets that some would consider to be “boring” — think bridges, roads, and all the sort. However, in the AI age, it’s the data center that’s the prime infrastructure to double down on. And in many regards, Brookfield already has as it scales its exposure.

Just last year, the firm bought bankrupt data center service provider Cyxtera Technologies in a deal worth $775 million, along with several of its data centers. Indeed, Cyxtera may have bit off more than it can chew. Either way, Brookfield seems to have stepped in at an opportune moment, landing what I believe is a fantastic deal that further solidifies its data center portfolio.

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