Could This Be the Most Underrated Infrastructure Play of the Decade? (Hint: It's Not a Data Center REIT)

Core Insights - Nvidia is currently the leader in producing chips for artificial intelligence, with a stock price increase of 25,000% over the past decade and comprising 8% of the S&P 500 [2] - The demand for data centers is rapidly growing due to the need for housing the computers that run Nvidia's chips, benefiting related industries such as data center REITs and companies like Nucor and Eaton [6] - Electricity demand is projected to grow significantly, with a 55% increase expected between 2020 and 2040, driven in part by the expansion of AI infrastructure [12] Nvidia's Market Position - Nvidia's current price-to-earnings (P/E) ratio is approximately 55x, which is high compared to the S&P 500 average of 29x, suggesting it may be attractively priced relative to its historical valuation [3] - Despite its current dominance, Nvidia's leadership in the AI chip market is not guaranteed to last, as historical precedents show that industry leaders can be surpassed [4] Data Center Demand - The growth in AI is leading to increased demand for data centers, which are essential for housing the servers that run AI applications [6] - Companies involved in the construction and management of data centers are likely to benefit from this trend, indicating potential investment opportunities in this sector [6] Electricity Sector Opportunities - The demand for electricity is expected to rise alongside the growth of data centers, making investments in electric utilities a viable option [8] - Investors can consider exchange-traded funds (ETFs) like the Vanguard Utilities ETF and the Utilities Select Sector SPDR ETF to capitalize on the increasing electricity demand [9][12] - Both ETFs have similar expense ratios and dividend yields, making them attractive options for investors looking to gain exposure to the utility sector [11]