| WEEKLY ROUNDUP
Hello, Reader. “Slow and steady wins the race” is the sage phrase used to teach children the value of patience and consistency. However, when it comes to investing – specifically along the road to artificial general intelligence – the better adverbs are “promptly” and “indirectly.” That’s because the stock market doesn’t offer any pure-play AGI companies, but does offer an array of indirect plays on the race toward AGI. AGI is when AI becomes capable of “generalized” cognitive abilities, allowing it to achieve superhuman cognition. Data centers, for example, provide the essential foundations that enable AI technologies to function and progress toward AGI. Therefore, companies that supply or enable various facets of data center infrastructure could enjoy years of boomtime conditions. In today’s Smart Money, I’d like to show you what indirectly investing in AGI looks like by taking a look at some examples of the “first wave” companies that would fall into the data-center category. Then, I’ll share where you can find the best “next wave” indirect AGI plays. Let’s take a look at these three first-wave plays… Quanta Services Inc. (PWR) is one of the world’s leading specialty contractors in the utility, telecom, and power business. Quanta’s electric power segment, which produces about half the company’s operating profit, could be a major beneficiary of the data center boom. That’s because data centers consume a large and growing share of U.S. electricity output. Researchers at Goldman Sachs predict data centers will consume as much as 8% of U.S. electricity by 2030, up from 3% today. Quanta could profit handsomely from this demand trend by helping electric utilities overhaul and expand their aging electric plants, substations, and transmission infrastructure. Vertiv Holdings Co. (VRT) is a leading provider of power and thermal management solutions for data centers. The company is a major global player in data center cooling solutions, power management products, and systems for monitoring and controlling digital infrastructure. In other words, the company offers the entire suite of critical digital infrastructure technologies required to build and run data centers. Because Vertiv employs more than 3,500 field service engineers out of 200 service centers worldwide, it can respond quickly to data center stoppages and reduce their downtime. Powell Industries Inc. (POWL) is a comprehensive provider of products and solutions for the electric power industry. AI energy demands have become so intense that even upstream suppliers are having trouble fulfilling demand. The waiting time for high-voltage transformers, for instance has risen from six months to as long as four years for those without reservations, according to Hitachi Energy CEO Andreas Schierenbeck. These supply-chain kinks have created a tailwind for construction companies like Powell Industries, which have both inventories on hand and long-term agreements with suppliers for increasingly hard-to-find equipment. As a result, Powell’s 12-month operating margins have skyrocketed during the last three years from less than 1% to a record-high 17.7%. I expect all three of these companies – these “first wave” indirect AGI plays – to continue thriving during the data center construction boom. And their lofty valuations already reflect a lot of good news. However, my team and I have been focusing on the “next wave” of stocks that do not yet reflect their AGI-powered growth potential. These companies, as a group, are well positioned to benefit from the data center boom that will facilitate the race toward AGI. Prime examples of companies in this category would include Fry’s Investment Report portfolio positions like… - a leader of fiber-optic communications technology…
- an industry-leading digital infrastructure provider…
- and an emerging leader in the water-handling business for the oil & gas industry.
These stocks are just a few examples of the indirect AGI plays that could flourish over the next couple of years. You can learn the names of these companies by joining me at Fry’s Investment Report today. As a member, you will also receive all of my latest research and recommendations. My team and I are actively researching and vetting additional prospects to introduce to our portfolio. Now, let’s look at what we covered here at Smart Money this past week… | 
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