Artificial intelligence (AI) has the potential to be the most impactful technology in history. That's driving companies to invest heavily to build out the digital backbone infrastructure this technology needs to thrive. Over the next decade, it's estimated that companies will need to invest a staggering $7 trillion in data centers, power generation capacity, and other related infrastructure to unleash the AI era.
As the AI infrastructure boom accelerates, a few companies are emerging as early leaders in capitalizing on this trend. Notably, Brookfield Corporation (BN +1.52%) and NextEra Energy (NEE +1.39%) stand out for their leading infrastructure businesses and strong growth prospects. Here's why these companies are among the best stocks to consider investing $1,000 in right now.
Building the AI backbone
Brookfield Corporation may not appear to be a leading AI stock at first glance. The global investment firm focuses on alternative investment management, wealth solutions, and operating real assets (infrastructure, power, industrial services, and real estate).
However, it's the company's expertise in investing in real assets and providing capital solutions that positions it to thrive in the AI age. Brookfield is leveraging its expertise in investing in and operating data centers, renewable power facilities, and other infrastructure to begin building AI factories, specialized data centers designed to optimize the creation and design of AI models. These facilities require a substantial amount of electricity to power high-performance GPUs, CPUs, networking, storage, and advanced cooling systems that support AI.
NYSE: BN
Key Data Points
Brookfield sees the potential to deploy upwards of $200 billion over the coming years to build out AI factories across North America and Europe through its managed funds and infrastructure affiliate, Brookfield Infrastructure. It's designing these facilities with their power needs in mind. It recently partnered with Bloom Energy to deploy up to $5 billion of that company's advanced fuel cells to support the always-on power needs of AI. Meanwhile, the company is leveraging its internal power expertise by building out a massive amount of renewable energy through its managed funds and renewable power operating company, Brookfield Renewable.
The company's AI-related investments help support its bold growth forecast. Brookfield believes it can grow its distributable earnings per share at a 25% compound annual rate over the next five years. That should support its ability to continue producing robust total returns for its shareholders.
Powering the surge in electricity demand
Electricity demand in the U.S. has remained relatively stable over the past couple of decades. However, forecasters expect demand to go hyperbolic over the next quarter-century, powered by AI data centers and other catalysts. This electricity will need to come from lower-carbon sources, such as renewable energy, natural gas, and nuclear power.
NYSE: NEE
Key Data Points
That forecast bodes well for NextEra Energy. It's one of the largest electric power and energy infrastructure companies on the continent, with a focus on clean power.
NextEra's energy resources business operates 39 gigawatts (GW) of power generation capacity and has another 30 GW in the backlog. Those projects are part of its mammoth $75 billion investment plan to build out new generation, energy storage, and electricity transmission lines through 2028 to support the country's surging power demand.
NextEra Energy's leadership in renewables and energy storage puts it in a strong position to continue developing clean power assets that support AI's growth in the future. The company is already building 6 GW of renewable projects to support new data centers. It possesses the expertise and financial resources to continue expanding its renewable energy capacity to provide more electricity to AI data centers.
Additionally, NextEra is a leader in building and operating gas-fired power plants. Earlier this year, it partnered with GE Vernova to identify and build new gas-fired power plants to support data centers over the next four years. Its partnership with the gas turbine maker gives it a competitive edge in developing new gas-fired power plants.
Finally, NextEra Energy has a large nuclear energy fleet. The company is currently looking to restart its Duane Arnald nuclear power plant in Iowa to support AI data center demand. It's also open to deploying small modular reactors to help provide AI with more power in the future, should the technology become more financially viable.
NextEra Energy expects its heavy investments to drive earnings growth at or near the top end of its 6% to 8% annual target range through 2027. It could continue to grow at or above that level in the future, as demand for power surges.
Capitalizing on the AI boom
Brookfield Corporation and NextEra Energy own, operate, and develop infrastructure crucial to supporting the growth of AI. That puts these companies in strong positions to capitalize on the AI infrastructure investment boom. It should power robust growth for both companies, which could enable them to generate high-powered total returns. That compelling upside potential makes them some of the best stocks to buy with $1,000 right now.
