While AI runs on software, it gets built with copper, pipelines, power plants and a lot of labour.
Tyler Rosenlicht thinks that’s where the next big opportunity is hiding.
This week on Ticker Take, we spoke with Rosenlicht, a senior vice-president at Cohen & Steers. He’s a portfolio manager for global listed infrastructure and head of natural resource equities. His view is that AI can’t scale without a massive investment in real-world infrastructure, and that the next decade will look very different from the last one. He sees a shift from “an era of abundance into an era of scarcity,” he told us.
When preparing his investment strategy, he looks for bottlenecks. Specifically, places where demand is strong and it’s hard to add supply. Then he tries to assess how long the bottleneck will last. The longer it lasts, the greater the potential he sees.
Here are nine names he likes. As always, this is not financial advice.
Williams (WMB)
Williams owns critical natural gas pipeline infrastructure. Rosenlicht says it used to be about moving gas from where it’s produced to where it’s needed. Now, the company is also generating power for data centres, which he thinks adds a lot of growth.
Tamboran Resources (TBN)
Rosenlicht says this one has a higher risk profile. Tamboran holds natural gas resources in northern Australia, but it still has to drill new wells to prove out what’s underground. If it can, he thinks Australia, with its LNG export capacity and pipelines, can become a key supplier of global energy.
Black Hills (BKH)
Utilities are in a tricky spot. Spending needs are rising, and so are worries about what that does to customer bills. Rosenlicht likes Black Hills because data centres want to set up in its territory, and its contracts and regulatory relationships are strong.
Entergy (ETR)
Entergy covers the southeastern U.S., where data centres and a wave of new industrial projects are driving big capital spending. Rosenlicht says the company can turn that spending into earnings growth without hitting local customers too hard. Other utilities are facing a lot more pushback.
MasTec (MTZ)
MasTec builds natural gas pipelines and electricity infrastructure for utilities. What it really offers, Rosenlicht says, is skilled labour. In his view, there aren’t huge pools of workers to build all of this, which gives MasTec an advantage.
SOLV Energy (MWH)
SOLV builds and maintains utility-scale solar projects. High oil prices from the Middle East might seem like good news only for traditional energy, but Rosenlicht sees it differently. “We need more of everything,” he says. He expects the projects to get bigger and more complicated, and margins to improve for the companies that can build them well.
Freeport-McMoRan (FCX)
Freeport is a direct play on copper. Data centres and electrification keep pushing demand up, but a new copper mine takes seven to 10 years to bring online. Rosenlicht thinks that gap means prices have to rise.
Perpetua Resources (PPTA)
Rosenlicht describes this as a below-the-radar pick. Perpetua owns gold, antimony and tungsten deposits in the U.S. Global supply chains were built to run just in time, he says, and that left them fragile. Countries are now trying to secure their own resources, and Perpetua is a domestic supplier of critical ones.
Cameco (CCJ)
Data centre operators need power that runs around the clock. “If you’re a data centre CEO, you kind of wake up with night sweats that you’re going to lose power,” Rosenlicht told us. Nuclear delivers steady, clean electricity, and Cameco mines and enriches uranium and owns a key company that helps build and maintain nuclear facilities. Rosenlicht thinks nuclear is in the middle of a renaissance, and he sees Cameco as a company at the convergence of a lot of trends.
The Ticker Take
Most of these companies do less-than-glamorous work. They dig, pipe, build and generate. But Rosenlicht says the AI build-out needs a lot of physical stuff, and supply can’t keep up.
Jon Erlichman is a BNN Bloomberg contributor and the host of Ticker Take on YouTube.
