This high-yielding dividend stock is perfectly positioned to cash in on the $1 trillion AI megatrend

Big tech companies, corporations and utilities are on track to spend about $1 trillion in capital expenditures to support AI in the coming years, according to an estimate by Goldman Sachs. Technology needs data centers, semiconductors and a lot of power to learn and generate results.

These investment trends play directly to the strengths of Brookfield Infrastructure (BIPC 1.61%) (BEEP 0.13%). The global infrastructure company operates utilities, gas pipelines and data centers and helps build new semiconductor capacity. It also has tremendous access to capital to help other companies support their AI investments.

Because of this, in Brookfield’s second-quarter earnings release, CEO Sam Pollock said, “the growth outlook is very favorable as increased adoption of AI creates substantial opportunities to deploy capital in our data, electric utilities, and natural gas.“ It could give Brookfield a lot more fuel to raise its dividend yield of nearly 4.5%.

Built around the three D’s

Brookfield Infrastructure has shaped its portfolio of operating companies to leverage three major investment themes: decarbonisation, digitization and deglobalisation. He sold businesses that did not align with the “three D” and recycled that capital in new ones that capitalize on one or more from those megatrends.

This strategy could pay big dividends for the company and its shareholders in the coming years. Pollock wrote about future opportunities for Brookfield in his second quarter letter to investors:

A decade of history investing in digital infrastructurecombined with our ability to create new capital solutions (such as our partnership with Intel), position us to be leaders in AI investment. We are in active discussions with several leading technology companies MEAN interested in using Brookfield Infrastructure’s market leader breadth and expertise. Tailwinds created from AI adoption support exponential growth of our global data center platforms that serve large hyperscalers, as well as our electric utilities and natural gas infrastructure that transports and supplies power to the grid in support increased load requirements.

As Pollock notes, companies are starting to come to Brookfield to help support their AI ambitions. They need more data center capacity and power, which Brookfield can provide.

It can also provide them with capital solutions, such as its partnership with Intel to help finance the construction of two new semi-conductor US manufacturing plants These AI-related investments could improve the company’s already robust growth rate.

It at present expects to grow its funds from operations by more than 10% annually in the coming years as a result of rising rates related to inflation, volume growth, capital projects and acquisitions.

Accelerating growth opportunities

Brookfield has already begun to see some investment opportunities related to artificial intelligence. Pollock wrote: “Globally data center platform, we continue to see strong momentum in leasing activity across all geographies, following investments in artificial intelligence and our customers’ need for more processing and storage capacity.“ He then highlighted some examples.

In Europe, Brookfield expects to grow its platform from the current 300 megawatts (MW) of operating or contracted capacity to more than 725 MW in its existing footprint. The company recently bought land in Athens, a new market, to support a 30 MW facility with a leader hyperscale data center client.

Meanwhile, the US data center platform has an operating capacity of 235 MW. It recently bought more land and now has room to expand its capacity to more than 1.1 GW in the coming years.

Those data center investments represent just a fraction of the $7.7 billion backlog of organic expansion projects. Other notable investments include investment in semiconductors and spending to expand natural gas infrastructure to provide utilities with more gas to generate electricity.

In addition to its strong organic growth drivers, Brookfield believes mergers and acquisitions (M&A) will further accelerate growth. The company sees a healthy global economy and falling interest rates as catalysts for a revival in M&A activity in the second half of this year. Companies need capital to fund their AI-related investments, which should open up a lot of new investment opportunities. Brookfield is in an excellent position to capitalize on this environment due to its robust access to capital.

Take advantage of the AI ​​megatrend

Companies could invest about $1 trillion in AI-related capital investment in the coming years. This should benefit Brookfield Infrastructure in several ways, including providing opportunities to expand its data center, electric utility and gas infrastructure operations.

In addition, it should open the doors to new investment opportunities either to partner with companies in need of capital or to acquire assets from them. That should help accelerate the company already strong growth rate, giving it more fuel to increase its high-yielding dividend. That growth and income could allow Brookfield to produce supercharged total profits for years to come, making it a great way to to potentially take advantage of the AI ​​investment boom.