The AI story shows no signs of cooling.
Instead, it’s only set to get hotter.
For one, according to Grand View Research, the global AI boom could grow from about $137 billion in 2022 to more than $1.81 trillion by 2030. In addition, artificial intelligence-related spending will make up about 8% to 10% of IT budgets in 2024, according to Wedbush.
Two, companies like Microsoft and Amazon earmarked $40 billion for investments in AI-related and data center projects all over the world.
Even Apple is still exploding on its AI news.
All after the tech giant introduced a range of new AI features, including an upgrade to its voice assistant Siri, integration with Open AI’s Chat GPT, and new writing assistance tools
As noted by CNBC, “Analysts from Morgan Stanley said Apple’s AI features strongly position the company with ‘the most differentiated consumer digital agent.’ Additionally, the analysts believe that the features will drive consumers to upgrade their iPhones, which should accelerate device replacement cycles.’”
Even more impressive, according to Goldman Sachs, far more power generation capacity will be need to accommodate that massive growth. One way to trade that is by picking up real estate investment trusts that own the data centers supporting AI growth.
Look at Digital Realty Trust (SYM: DLR), for example.
With a yield of 3.2%, the real estate investment trust owns data centers around the world. All of which are seeing substantial demand with the AI boom. Helping, analysts at BMO Capital just upgraded DLR to outperform.
As noted by the firm, “We believe DLR remains well-positioned as a play on the AI-thematic, particularly within REITs, with room for further multiple expansion. Data center net absorption continues to set records (N. America leasing of ~4GW in 2023 and 5.5-6GW expected in 2024), supported by ongoing investments from hyper-scales as they develop their AI capabilities,” as quoted by Seeking Alpha.
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