There's no question that artificial intelligence (AI) is one of the most transformative technologies of modern times. However, the lofty valuations some of the top AI stocks are trading for are causing some investors to approach with caution, or to avoid AI investing altogether. If you're looking for AI exposure at a reasonable price, it could be a smart idea to take a closer look at Prologis (NYSE: PLD). Here's why. Where to invest $1,000 right now? Our analyst team just revealed what they believe are th ...

Core Insights - Microsoft is expanding its data center operations by constructing 15 additional data centers in Mount Pleasant, Wisconsin, which will enhance its capacity to recognize revenue from clients like OpenAI [1][2]. Group 1: Expansion Plans - The new data centers will cover almost 9 million square feet and are expected to have a taxable value exceeding $13 billion [5]. - The Mount Pleasant village board has unanimously approved the plans for the new data centers, indicating local support for Microsoft's expansion [6]. Group 2: Community Response - While many residents in Mount Pleasant support the expansion, there has been opposition in the adjacent village of Caledonia, where residents protested against Microsoft's request to rezone land for a data center [4]. - Concerns were raised during public comments about the permanence of jobs created by the data centers, but local officials defended the long-term nature of the employment opportunities [6][7]. Group 3: Industry Context - Microsoft is competing with Amazon, Google, and Oracle in the race to build data centers equipped with Nvidia chips for generative AI applications [2]. - The construction of data centers faces challenges, including the availability of energy from utilities and local opposition from residents [2].

Core Viewpoint - The article highlights three high-quality dividend stocks—Brookfield Infrastructure, ExxonMobil, and Prologis—that offer attractive yields above 3% and are expected to continue increasing their dividends due to strong business fundamentals and financial profiles [1][14]. Group 1: Brookfield Infrastructure - Brookfield Infrastructure has a dividend yield of approximately 3.8% and operates a diverse portfolio across utilities, transportation, energy midstream, and data sectors, generating stable cash flows backed by long-term contracts [2][5]. - The company aims to distribute 60% to 70% of its stable cash flows as dividends while retaining the rest for reinvestment, with a backlog of $7.8 billion in capital projects expected to be completed in the next two to three years, primarily in the data segment [3][5]. - Brookfield has secured $1.5 billion in new business deals over the past year and anticipates growing its funds from operations by over 10% annually, which should drive dividend increases of 5% to 9% each year [5][14]. Group 2: ExxonMobil - ExxonMobil has a dividend yield of just over 3% and benefits from a large-scale, integrated business model that mitigates the impact of oil price volatility on earnings [6][8]. - The company expects to achieve $25 billion in earnings growth and $35 billion in cash flow growth by 2030, driven by structural cost savings and high-return capital projects [8][9]. - ExxonMobil plans to generate approximately $145 billion in cumulative surplus cash over the next five years, allowing for continued dividend increases, having raised its dividend for 42 consecutive years [9][14]. Group 3: Prologis - Prologis offers a dividend yield of 3.2%, supported by stable cash flows from long-term leases that typically include annual rental escalations [10][12]. - The REIT maintains a conservative dividend payout ratio and a strong balance sheet, providing financial flexibility for portfolio expansion through development projects and acquisitions [12][13]. - Prologis primarily invests in logistics properties and aims to leverage its land bank and expertise in developing data centers, which should facilitate ongoing dividend growth, having increased its payout at a 13% compound annual rate over the last five years [13][14].

Financial Data and Key Metrics Changes - Q4 core FFO was $1.44 per share, finishing at the top end of guidance ranges [10] - Average occupancy was 95.3% for Q4 and 95% for the full year, with period-end occupancy at 95.8% [10] - Same-store NOI growth was 4.7% on a net effective basis and 5.7% on a cash basis, exceeding guidance [11] - Net effective rent change for the year was over 50%, with a quarterly change of 44% [10][11] Business Line Data and Key Metrics Changes - The company signed 57 million sq ft of leases in Q4, driving occupancy towards 96% [9] - Development platform, particularly build-to-suits, exceeded expectations, capturing significant market share [9] - The Data Center business saw a growing power pipeline, with expectations for solid starts in the upcoming year [9] Market Data and Key Metrics Changes - Q4 net absorption was 59 million sq ft in the U.S., leading to a decline in U.S. vacancy to 7.4% [14] - Many markets are experiencing a slowdown in rent decline, with some showing positive growth [14] - International markets, particularly in Latin America and Europe, are outperforming, with strong occupancy and rent growth [16] Company Strategy and Development Direction - The company focuses on three priorities: extending leadership as a best-in-class operator, capturing value creation opportunities in logistics and data centers, and enhancing shareholder returns through growth in assets under management [7][8] - The company aims to develop critical infrastructure in logistics and data centers, leveraging customer relationships and expertise [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational momentum and strategic initiatives in place for 2026, indicating a strong position for long-term growth [22] - The tone of customer conversations is increasingly positive, with e-commerce driving demand [15] - Management noted that while uncertainties exist, they are treated as planning assumptions rather than impediments [15] Other Important Information - The company sold approximately $900 million of value-maximized assets and acquired $625 million at attractive discounts [11] - The company achieved significant milestones in strategic capital, including the IPO of the China AMC Prologis Logistics REIT [17] Q&A Session Summary Question: Changes in strategic initiatives with new leadership - Management highlighted a focus on compounding the core logistics business while broadening the platform, with plans to grow strategic capital significantly [24][25] Question: Market rent growth expectations for 2026 - Management expects net absorption to approach 200 million sq ft in 2026, with vacancies declining to 7.1%-7.2% by year-end [33] Question: Data Center project details and guidance - Management indicated that 40% of the overall development starts guidance will be in Data Centers, with a mix of powered shell and turnkey projects [38] Question: Update on the 10 GW power outlook - Management remains confident in the 10 GW pipeline, emphasizing the significant opportunities available [43] Question: Capital deployment pipeline and ramp-up - Management noted that capital deployment decisions are made based on market conditions, with a significant number of opportunities available [56][57] Question: Same-store growth guidance breakdown - Management indicated that occupancy gains are expected across geographies, with a smaller contribution from mark-to-market as rent changes normalize [79]

Financial Data and Key Metrics Changes - Fourth quarter core FFO was $1.44 per share, finishing at the top end of guidance ranges [10] - Average occupancy was 95.3% for the quarter and 95% for the full year, with period-end finishing at 95.8% [10] - Net effective rent change was 44% for the quarter, contributing approximately $60 million of annualized NOI, with a full-year net effective rent change exceeding 50% [10] - Same-store NOI growth was 4.7% on a net effective basis and 5.7% on a cash basis, each ahead of guidance midpoint [11] Business Line Data and Key Metrics Changes - The company signed 57 million sq ft of leases in the quarter, driving occupancy toward 96% [9] - Development platform, particularly in build-to-suits, continues to outperform, with $1.1 billion in new buildings started in the quarter [12] - In strategic capital, two new investment vehicles were formed in the U.S. and China [9] Market Data and Key Metrics Changes - Fourth quarter net absorption was 59 million sq ft in the U.S., with a decline in U.S. vacancy to 7.4% [13][14] - Many markets are beginning to see expansion as market rent growth starts to outpace portfolio churn [11] - International markets, particularly in Latin America and Europe, are outperforming, with strong occupancy and ongoing rent growth [16] Company Strategy and Development Direction - The company focuses on three priorities: extending leadership as a best-in-class operator, capturing value creation opportunities in logistics and data centers, and enhancing shareholder returns through growth in assets under management [6][8] - The company aims to develop critical infrastructure with a growing power pipeline and deep customer relationships [7] - Strategic capital partners are increasingly seeking fewer managers who can deliver consistent performance across geographies and strategies [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational and financial results despite challenges in 2025, highlighting the strength and resilience of the platform [20] - The company anticipates positive rent growth to emerge more clearly over the course of 2026, with market vacancies expected to improve [30][31] - Management noted that e-commerce remains a significant driver of demand, representing approximately 20% of new leasing activity over the last year [15] Other Important Information - The company achieved significant milestones in strategic capital, including the IPO of the China AMC Prologis Logistics REIT [17] - The installed capacity in the energy business reached 1.1 gigawatts, surpassing the previous goal [12] Q&A Session Summary Question: Changes in strategic initiatives with new leadership - Management emphasized a focus on compounding the core logistics business while broadening the platform, with plans to grow the strategic capital area significantly [22][24] Question: Market rent growth expectations for 2026 - Management expects net absorption to approach 200 million sq ft in 2026, with vacancies declining to 7.1%-7.2% by year-end [30][31] Question: Data center project details and guidance - Approximately 40% of the development starts guidance for 2026 is expected to be in data centers, with a small number of imminent projects [35] Question: Clarification on occupancy growth and FFO growth limits - Management expressed confidence in occupancy growth despite potential downticks, with a forecast of a 25 basis points increase in average occupancy [43] Question: Capital deployment pipeline and ramp-up - Management highlighted a significant number of opportunities and the ability to make decisions based on market conditions [51][52] Question: Same-store growth guidance breakdown - The guidance reflects a mix of occupancy gains and mark-to-market improvements, with occupancy drag expected to lessen over time [64]

Financial Data and Key Metrics Changes - Fourth quarter core FFO was $1.44 per share, including net promote expense, and $1.46 per share, excluding net promote expense, finishing at the top end of guidance ranges [9] - Average occupancy was 95.3% for the quarter and 95% for the full year, with period-end finishing at 95.8% [9] - Net effective rent change was 44% for the quarter, contributing approximately $60 million of annualized NOI, driving net effective rent change for the year to more than 50% [9] - Same-store NOI growth was 4.7% on a net effective basis and 5.7% on a cash basis, each ahead of guidance midpoint [10] Business Line Data and Key Metrics Changes - The company signed 57 million sq ft of leases in the quarter, driving occupancy toward 96% [8] - The development platform, particularly in build-to-suits, continues to outperform, with 48% of new buildings started being build-to-suit [11] - In strategic capital, two new investment vehicles were formed in the U.S. and China [8] Market Data and Key Metrics Changes - Fourth quarter net absorption was 59 million sq ft in the U.S., leading to a decline in U.S. vacancy to 7.4% [12] - Many markets are beginning to see expansion as market rent growth starts to outpace portfolio churn [10] - International markets, particularly in Latin America and Europe, are showing robust consumption trends and high occupancy [14][15] Company Strategy and Development Direction - The company focuses on three priorities: extending leadership as a best-in-class operator, capturing value creation opportunities in logistics and data centers, and enhancing shareholder returns through growth in assets under management [5][6] - The company aims to develop critical infrastructure with a growing power pipeline and deep customer relationships [5] - The strategic capital area is expected to grow significantly through existing and new vehicles [22] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational and financial results despite challenges in 2025, highlighting the strength and resilience of the platform [19] - The company anticipates positive rent growth to emerge more clearly over the course of 2026, with net absorption expected to approach 200 million sq ft [26] - Management noted that uncertainty remains, but it is treated more as a planning assumption rather than an impediment [13] Other Important Information - The company achieved significant milestones in strategic capital, including the IPO of the China AMC Prologis Logistics REIT [15] - The installed capacity in the energy business reached 1.1 gigawatts, surpassing the previous goal [11] Q&A Session Summary Question: Changes in strategic initiatives with new leadership - The focus remains on compounding the core logistics business while broadening the platform, with an emphasis on development where supply is constrained [22] Question: Market rent growth expectations for 2026 - Market vacancies are expected to improve, with net absorption anticipated to approach 200 million sq ft in 2026 [26] Question: Data center project details and guidance - Approximately 40% of the development starts guidance is expected to be in data centers, with a mix of Powered Shell and Turnkey projects [28] Question: Clarification on occupancy growth in U.S. vs. international markets - Occupancy gains are expected to be dispersed across geographies, with more weight coming from the U.S. [50] Question: Contribution expectations for new vehicles in 2026 - The contribution guidance includes the Agility Fund, which will undertake development activities and take contributions of land from Prologis [45]

Core Insights - The primary value of AI for large industrial firms lies in accelerating engineering processes rather than job displacement [1][2] - There is a significant shortage of engineers in the U.S. compared to China, with a ratio of approximately 10-to-1, leading to longer development cycles and unfilled positions [2] - AI agents can perform tasks at the level of junior engineers, handling repetitive work that consumes a substantial portion of engineers' time [3] Engineering Talent Shortage - The U.S. industrial sector faces a chronic shortage of engineers, with only about 130,000 graduates annually compared to 1.3 million in China [2] - This shortage results in deferred product improvements and longer development cycles, impacting the ability to design and maintain essential infrastructure [2] Role of AI in Engineering - AI agents can assist in various engineering tasks, including parsing requirements, customizing products, and generating documentation, thereby allowing human engineers to focus on more strategic aspects [3][4] - The integration of AI does not replace human engineers but amplifies their capabilities by taking over routine tasks [4] Concerns Over Data Security - Industrial firms are cautious about adopting new digital technologies due to concerns over intellectual property and data security [5] - The complexity and opacity of AI models pose challenges for traditional information security methods, making it difficult to identify and contain potential leaks of trade secrets [5]

Core Insights - Big tech companies are increasingly entering into direct agreements with utility companies to ensure stable and long-term energy supplies due to rising power demands driven by data centers, cloud computing, and artificial intelligence [1] Group 1 - The surge in power needs is primarily attributed to the expansion of data centers [1] - Cloud computing is a significant factor contributing to the increased energy requirements of big tech firms [1] - Artificial intelligence is also driving the demand for reliable energy sources among major technology companies [1]

Core Insights - Meta has signed agreements with three nuclear energy companies, making it one of the top buyers of nuclear energy in the U.S. [2] - The agreements aim to support the development of advanced nuclear technologies and enhance the energy infrastructure necessary for AI data centers [3][4] Group 1: Agreements and Partnerships - Meta's agreements with Vistra, TerraPower, and Oklo, along with a previous agreement with Constellation Energy, position the company as a significant player in the nuclear energy market [2] - The partnership with TerraPower will fund the development of two Natrium reactors and energy storage systems, providing Meta with energy rights from up to six additional Natrium units [3] - The agreement with Oklo supports the establishment of a new nuclear technology campus in Ohio and the development of several Aurora Powerhouse reactors [4] Group 2: Energy Supply and Infrastructure - Meta's agreement with Vistra involves purchasing energy from two operating nuclear power plants in Ohio and one in Pennsylvania, ensuring long-term support and investment in these facilities [5] - This commitment from Meta provides Vistra with the certainty needed to invest in existing plants and communities, facilitating new nuclear generation for the grid [6] - The growing demand for electricity from data centers, driven by the AI boom, has led to increased interest from Wall Street investment firms in acquiring utilities [7]

This story was originally published on Utility Dive. To receive daily news and insights, subscribe to our free daily Utility Dive newsletter. New year, same theme: data centers. The PJM Interconnection’s market monitor is once again blaming data centers for the results of its latest capacity auction. Meanwhile, Texas’ large load queue exploded last year, largely due to — you guessed it! — data centers. Here are those and other numbers that caught our eye in the early days of 2026. ►40% How much reven ...