Investing.com — Bernstein has recommended buying shares of Quanta Services, Eaton, Vertiv and Equinix, among other companies exposed to artificial intelligence infrastructure, arguing that concerns over political opposition to data centre construction in the United States may have created an attractive buying opportunity ahead of Tuesday’s midterm elections.
The brokerage said investors could initially react negatively if candidates favouring tighter restrictions on data centre development perform well, but believes the market may have overstated the risks. Strong economic incentives, including employment generation, infrastructure investment and tax revenues, are likely to encourage elected officials to moderate their positions rather than halt construction.
Bernstein identified 244 gigawatts (GW), representing around 56% of the 433 GW U.S. data centre project pipeline, as being exposed to political risks based on election probabilities and candidates’ policy positions. However, it expects the debate to focus more on making developers pay a greater share of electricity and grid infrastructure costs than on stopping projects altogether.
Among its preferred U.S. stocks, Bernstein maintained Outperform ratings on Quanta Services, with a price target of $804, Eaton, with a target of $534, and Vertiv, with a target of $376.
The brokerage also favoured Equinix, with a price target of $1,270, and Digital Realty, with a target of $226, citing their exposure to data centre infrastructure demand.
Other preferred stocks included nVent, with a $233 price target, Johnson Controls, with a $194 target, Trane Technologies, with a $555 target, Forgent, with a $48 target, and Legence, with a $103 target.
Bernstein also maintained an Outperform rating on GE Vernova, with a $1,298 price target, highlighting opportunities across the electrical equipment and power infrastructure supply chain.
In Europe, the brokerage favoured Siemens (SIE), with a €330 price target, Siemens Energy (ENR), with a €210 target, and Schneider Electric (SU), with a €340 target.
The brokerage’s optimism comes despite growing public resistance to data centre expansion, with electricity costs and environmental concerns emerging as major political issues. It argued that data centre construction represents a significant economic contribution, accounting for around 8% of state-level GDP, while craft labour wages account for approximately 3%.
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
