Nvidia (NVDA +0.35%) has been one of the early beneficiaries of the artificial intelligence (AI) megatrend. The company's semiconductors provide the computing power AI needs to thrive. That's driven up Nvidia's profit and its valuation. While Nvidia's stock has fallen more than 30% from its recent peak over concerns about Deepseek and tariffs, it's still expensive at nearly 35 times earnings. That's much higher than the S&P 500, which trades at about 21 times earnings.
The good news for more value-conscious investors is that there are much cheaper ways to invest in the AI megatrend. Dominion (D 1.55%), NextEra Energy (NEE 0.79%), and Brookfield Infrastructure (BIPC +0.26%)(BIP 0.46%) stand out to a few Fool.com contributors as less expensive AI plays.
Dominion Energy is well located to serve AI
NYSE: D
Key Data Points
Reuben Gregg Brewer (Dominion Energy): There are some reasons to dislike Dominion Energy, including a dividend cut a few years ago and the lack of dividend growth in recent years. However, this giant U.S. regulated utility is working toward a stronger balance sheet, a peer-consistent payout ratio, and a return to dividend growth. Helping to power the company's progress is its monopoly in Northern Virginia, one of the largest data center markets in the world.
As a regulated utility, Dominion Energy is granted a monopoly in the regions it serves in exchange for having its rates and capital investment plans overseen by state regulators. Slow and steady growth is the usual outcome, though sometimes utilities can get out over their skis. That's what happened to Dominion, but it has now reset the business so it's back on a more traditional path. The expectation is for 5% to 7% earnings growth over the foreseeable future, with dividend growth, when it resumes, likely to track along with earnings growth.
AI fits neatly into the story because demand is exploding in Dominion's Virginia operations. Between July and December 2024 the company's pipeline of power requests from data centers increased 88%. Regulators are highly likely to approve capital spending associated with this demand. That will help Dominion get back to dividend growth more quickly, which will probably result in a higher valuation for the shares. With a lofty 5% dividend yield today, that makes this both a near-term income play and a long-term capital appreciation play. And AI is a key factor in all of it.
Providing for AI's surging power needs
NYSE: NEE
Key Data Points
Neha Chamaria (NextEra Energy): According to the latest energy report from the International Energy Agency, AI-driven data centers alone could account for almost 50% of the growth in demand for electricity in the U.S. between now and 2030. At the same time, with emissions from data centers also expected to nearly double by 2030, global tech majors are increasingly seeking cleaner sources of energy to meet their future power demands.
The combination perfectly sets the stage for growth for a company like NextEra Energy, which not only owns the largest electric utility in the U.S., Florida Power & Light, but is also the world's leading producer of energy from wind and solar and a leader in battery storage. The company also has large natural gas and nuclear fleets.
In renewables alone, NextEra Energy expects to develop 36.5 gigawatts (GW) to 46.5 GW of new capacity through 2027, which is more than its existing capacity in operation. The company expects the investments to drive its adjusted earnings per share higher by 6% to 8% between 2024 and 2027, and dividend per share by around 10% through at least 2026.
NextEra Energy, in fact, is also deploying AI into its business. Its renewable energy arm, for instance, uses AI for land analysis to expedite discussions with landowners and regulators. In early 2025, NextEra Energy also struck an agreement with GE Vernova to build natural gas power solutions that are largely expected to support demand from data centers.
With NextEra Energy stock shedding almost 20% value in the past six months, growing its dividend payout consistently, and yielding 3.5%, this one's an offbeat AI play you'd want to consider owning for the long term.
Crucial AI infrastructure
NYSE: BIPC
Key Data Points
Matt DiLallo (Brookfield Infrastructure): Brookfield Infrastructure is a leading global infrastructure operator. Its business spans utilities, energy midstream, transportation, and data infrastructure. The company estimates that businesses supplying more than 60% of its funds from operations will benefit from digitalization catalysts like AI.
The company's data infrastructure platform is an obvious beneficiary of the AI megatrend. Brookfield operates a growing global data center platform. Those are crucial facilities in supporting the technology. The company is also investing in semiconductor fabrication facilities and owns communication towers and fiber networks that will see additional growth from AI.
On top of that, Brookfield's energy midstream and utilities assets will get a boost from AI's growing power demands. Natural gas will be a crucial fuel in supporting the always-on power needs of AI data centers. That will benefit Brookfield's gas storage, transportation, and distribution businesses.
Brookfield sees a massive investment opportunity across its existing infrastructure platforms and new ones related to AI infrastructure. It estimates that the world will need to invest over $8 trillion in AI infrastructure, including semiconductor manufacturing, compute-as-a-service, energy management, autonomous transportation, robotics, and other technologies over the next three years. It believes it can play a key role in helping meet this massive investment requirement.
Investors haven't even begun to price in Brookfield's AI-powered upside potential. The global infrastructure operator trades at around 11 times its FFO. That's dirt cheap for a company that expects to grow by more than 10% per year. It's why Brookfield currently offers such an attractive dividend yield of nearly 5%. The company's AI-powered upside could enable it to grow its dividend toward the high end of its 5% to 9% annual target range.
