My Top AI Growth Stocks to Buy in October

Brookfield Infrastructure (BIPC 0.09%) (BEEP -0.43%) is not the most prominent name when it comes to the artificial intelligence (AI) megatrend. It didn’t develop a popular AI chatbot or specialized semiconductor chips REQUIRED to power AI applications.

However, technology simply they cannot thrive without companies like Brookfield Infrastructure. It provides the core energy and digital infrastructure needed to power AI applications. Its importance to AIalong with other factors, make it my top AI growth stock to buy this month.

Critical AI infrastructure

Brookfield Infrastructure operates four global platforms focused on utilities, midstream energy, transportation and data infrastructure. The company estimates that over 60% of its funds come from operations (FFO) they have exposure to the digitization trend. That’s because AI requires two main factors to thrive: computing power and electricity.

A typical non-AI workload requires informatics power of 5-15 kilowatts (KW) of semiconductor chips per rack. On the other hand, AI workloads require five times more computing power (20 to 70 KW per rack). For this reason, data centers will need an enormous amount of electricity in the coming years. Brookfield estimates their energy demand will triple by 2030, rising from 16 gigawatts (GW) to 45 GW.

Brookfield is in an excellent position to capitalize on both sides of this demand driver. It operates critical natural gas intermediate infrastructure such as pipelines, processing plants and gas storage capacity. Natural gas will be a critical fuel to power the grid to help meet the growing demand for electricity from AI and other catalysts such as electric vehicles.

Meanwhile, Brookfield operates utilities that generate electricity from natural gas and distribute gas and electricity to end users. This further enhances its ability to tap into growing energy demand.

The company also has a growing data infrastructure platform. Invest heavily in supporting the construction of two new ones semi-conductor manufacturing facilities in the USA with Intel. In addition, it has a rapidly expanding global data center platform.

A cheap way to get AI-powered perks

The AI ​​megatrend has driven up the share prices of many obvious AI companies, such as AI giant chip Nvidia and cloud the computing and AI giant Microsoft. As a result, the P/E ratio of the tech-heavy Nasdaq-100 index it has increased from 29.5 years ago to more than 32 times today.

However, the market has yet to realize how much the impact that AI will have Brookfield. This is evident in his current rating. Brookfield Infrastructure trades at about 14.4 times adjusted FFO. That’s cheaper than its historical valuation (15.5x) and recent average (16.5x over the past five years), even though the company’s future growth prospects are brighter than ever.

Its existing assets (especially gas infrastructure) are becoming more valuable than originally assumed. Furthermore, its set of future investment opportunities is massive, far exceeding previous expectations.

Brookfield Infrastructure is already growing in a healthy way without the expected acceleration from AI. FFO per share is up 10% over the past year. That’s a robust growth rate for a company that offers a high dividend yield (currently over 3.5%). That payout, which the company expects to grow at an annual rate of 5% to 9%, is in addition to totally strong return potential.

With growing earnings at a double digit rate too dividend yield of over 3.5%, Brookfield’s average annualized total return could be in the mid-teens. There is further upside potential if the valuation multiple improves.

This under-the-radar AI game could generate spectacularly he returns

Brookfield Infrastructure isn’t the first stock many investors consider when looking at AI. However, given its energy and digital infrastructure assets, it did strong exposure to this trend. Because of this, it should grow rapidly in the future. Meanwhile, investors get this growth at a very low cost by allowing them TO also lock in an attractive dividend yield.

Add it all up and Brookfield Infrastructure has a great risk/reward profile, making it the best AI stock I’m buying in October.