AI Investment Boom Boosts European Industrial Stocks
A New Era of Growth
European industrial stocks are on the rise, thanks to a massive investment push in artificial intelligence (AI) infrastructure in the United States. The news has sent shares of companies like Schneider Electric and Prysmian soaring to record highs.
A $500 Billion Investment
On Tuesday, the U.S. President announced a private-sector investment of up to $500 billion to fund AI infrastructure, sparking a wave of buying in stocks that support the development of this technology. The investment is expected to have a significant impact on companies that provide electrical equipment, cables, and other infrastructure necessary for data centers.
Schneider Electric Leads the Charge
French group Schneider Electric, a major supplier of electrical equipment and infrastructure for data centers, saw its shares surge 3.4% to a new historic high in Paris. The company’s recent acquisition of Motivair, a U.S. specialist in liquid cooling solutions for data centers, has positioned it well to benefit from the AI investment boom.
Prysmian Cables In
Italian cable maker Prysmian, which acquired U.S.-based Encore Wire last year, gained 3.3% to hit a lifetime peak. The company is now well-placed to capitalize on the growing demand for cables and other components necessary for data centers.
A Ripple Effect
Under the Stargate initiative, a joint venture between ChatGPT creator OpenAI, SoftBank, Oracle, and other equity backers, will initially deploy $100 billion, with the remaining investment expected to occur over the next four years. According to a Prysmian spokesperson, the investments will have a ripple effect on the power grid, beyond the direct impact on their industrial and construction business.
Other Winners
Shares in other companies also benefited from the news, with Germany’s Siemens Energy and ABB, which provide electric hardware for AI infrastructure, rising 7.5% and 3.1% respectively to new historic highs.
Tapping into Trends
“These companies are part of the investment baskets focused on electrification, data centers, and energy transportation infrastructure, which benefit from the ongoing trends in AI, electric vehicles, and more,” said Angelo Meda, head of equities at Banor SIM in Milan. “In Europe, which lacks tech giants, these stocks are a way to tap into these trends.”
A Broader Impact
The surge in AI investment is expected to have a broader impact on the economy, as companies across sectors integrate artificial intelligence into their products and services. With investment in AI surging since OpenAI launched ChatGPT in 2022, European industrial stocks are well-positioned to benefit from this growing trend.
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