The recent decline in technology stocks after a strong rally fueled by Artificial Intelligence (AI) is not surprising, given the elevated valuations reached this year. Volatility is to be expected as the AI sector matures, but the long-term outlook for the industry remains positive.
AI encompasses more than just powerful computer chips and cloud services; it also drives demand for products and services outside the tech industry. Providers of power and fuel necessary to generate electricity will play crucial roles in the expansion of AI services.
One company poised to benefit from this trend is TC Energy, which operates extensive natural gas infrastructure in Canada, the United States, and Mexico. With the increasing need for reliable and scalable electricity to power AI data centers, TC Energy’s supply of natural gas positions it well to meet this demand. The company has reported strong Q2 2024 results and has a significant capital program in place to drive revenue growth.
Investors in TC Energy can also benefit from a 6.5% dividend yield, with the company having raised its dividend for the past 24 years. Similarly, Enbridge, known for its oil pipeline infrastructure, has expanded into renewables and natural gas utilities. The company’s recent acquisition of natural gas utilities in the U.S. will position it as the largest natural gas utility operator in North America.
Enbridge’s renewables division is well-placed to benefit from the increasing demand for green power to complement other energy sources in data centers. The company has reported record earnings and increased guidance for future financial results, with a significant capital program expected to drive growth in distributable cash flow. Investors in Enbridge can also enjoy a 7% dividend yield, with the company having raised its dividend for the past 29 years.
In conclusion, TC Energy and Enbridge are examples of non-tech stocks poised to benefit from the growth of AI in the coming years. For investors looking to capitalize on this trend, these stocks should be considered for their portfolios.
