Exploring Indirect Investments in the Race for Artificial General Intelligence

The saying “Slow and steady wins the race” teaches the values of patience and consistency.

In the world of investments, particularly concerning artificial general intelligence (AGI), the key concepts shift to “promptly” and “indirectly.”

While the stock market lacks companies solely focused on AGI, it does feature a variety of indirect opportunities that are crucial to progress in this field. AGI refers to the ability of AI to perform generalized cognitive tasks, reaching levels of superhuman intelligence.

Data centers play a vital role, providing the necessary infrastructure for AI technologies to thrive and evolve towards AGI. Consequently, companies that offer goods and services for data center infrastructure are poised for sustained growth in this booming market.

In today’s Smart Money, I will illustrate what indirect investment in AGI entails by highlighting some “first wave” companies in the data-center sector.

Next, I’ll point out promising “next wave” investment opportunities positioned to benefit from this trend.

Let’s examine three key players in the first wave…

Quanta Services Inc. (PWR) stands as a leading specialty contractor in the utility, telecom, and power sectors. The electric power division, which accounts for about half of its operating income, could greatly benefit from the ongoing data center expansion. Data centers are projected to consume a larger portion of U.S. electricity which is integral for their operations.

A Goldman Sachs study suggests that data center electricity consumption may rise to as much as 8% of the U.S. total by 2030, up from 3% currently. Quanta Services could capitalize on this increasing demand by assisting electric utilities in modernizing and expanding essential infrastructure.

Vertiv Holdings Co. (VRT) is a key provider of power and thermal management solutions crucial for data centers. The company is a prominent entity in offerings ranging from cooling systems to power management tools and infrastructure monitoring.

With a workforce of over 3,500 field service engineers located across 200 service centers globally, Vertiv can swiftly address data center downtimes, minimizing operational interruptions.

Powell Industries Inc. (POWL) delivers a diverse array of products and solutions for the electric power industry. The surging energy needs driven by AI are straining supply chains; for instance, high-voltage transformer wait times have extended from six months to four years for those lacking reservations, according to Hitachi Energy CEO Andreas Schierenbeck.

This supply-chain pressure favors construction companies like Powell Industries, which maintain inventories and long-term supplier contracts for scarce equipment. Consequently, Powell’s operating margins have soared from under 1% to a record high of 17.7% over the past three years.

It’s likely that all three of these first-wave companies will continue to prosper amidst the booming data center construction. Their current high valuations suggest they have already factored in much of the positive news.

However, my team and I are more focused on the companies in the “next wave” that have not yet reflected their potential growth related to AGI. This group is strategically positioned to capitalize on the booming data center industry, fueling progress toward AGI.

Notable examples from Fry’s Investment Report portfolio include…

• a leader in fiber-optic communications technology…
• an industry-leading digital infrastructure provider…
• and an emerging player in water management for the oil & gas sector.

These stocks represent just a few indirect AGI investments that may thrive in the coming years. For insights into these companies, consider joining me at Fry’s Investment Report today.

As a member, you will access the latest research and recommendations where my team and I are diligently seeking additional promising opportunities to include in our portfolio.

Now, let’s recap what we discussed in Smart Money this week…

Smart Money Highlights

Introducing the “Green Day” Strategy: A Major Investment Breakthrough

Investors tend to follow trends, seeking to ride the wave of momentum, often missing the boat until it’s too late. However, our partners at TradeSmith have spent two decades developing a tool that adds a layer of predictability to an otherwise uncertain field through the analysis of identifiable seasonality patterns. Click here for insights into TradeSmith CEO Keith Kaplan’s trading approach.

Nvidia Shines at CES, Spotlighting AI’s Promising Future Profits

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At CES 2025, Nvidia took a significant step in AI technology, indicating plans for artificial general intelligence (AGI)—an AI that mimics human thought processes. For more details on Nvidia’s announcements, click here.

Capitalize on the “Pre-AGI Market” Now

Individuals who adapt to technological advancements can potentially achieve unprecedented wealth. The advent of AGI may pave the way for unparalleled wealth generation in history. This prompted me to initiate a 1,000-day countdown to AGI. Continue reading for more information.

Potential Benefits from an Icy Winter for Natural Gas Stocks

During the winter of 2022, fears about cold weather sent natural gas prices down, which negatively impacted energy companies’ stock prices. The recent warnings of another potentially frigid winter have led some to question the reliability of such forecasts, likening it to “The Boy Who Cried Wolf.” Read on for Tom Yeung’s insights on natural gas investments this season.

Looking Forward

As we conclude, there’s another significant opportunity related to AGI on the horizon…

Last week, I suggested a prominent video-conferencing company to my subscribers. Their AI-enhanced communication tools have allowed them to secure a strong market position.

More comprehensive details about this company will be featured in the upcoming Fry’s Investment Report January issue, releasing tomorrow.

Fry’s Investment Report members should watch their inbox for this update.

For those interested, learn how to become a member here.

Best regards,

Eric Fry

Editor, Smart Money