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I think many investors are still underestimating how significant the Artificial Intelligence boom is, and how broadly it will affect markets. While we all know the primary beneficiaries of AI, like Nvidia (NVDA - Free Report) , Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) , there are a litany of industries and companies that will feel the ripples of this new technology.
From semiconductor designers and producers to network distributors, data storage companies, and energy production. Yes, the AI boom may be so significant that the utility companies providing power to the technology companies will benefit from the increase in demand.
This fact has not been missed by the mega-cap tech companies, as both Microsoft and Amazon have acquired small energy production companies to power their server farms. Furthermore, there has been a particular focus on a certain type of energy production, Nuclear.
In the article below, I will share two top ranked stocks that represent ancillary ways to get exposure to the AI boom. One is an energy producer, and the other is a REIT (Real Estate Investment Trust) that caters to IT businesses. Because these companies seem so far from AI epicenter, I believe some investors are overlooking their potential.
Image Source: Zacks Investment Research
Iron Mountain
Iron Mountain (IRM - Free Report) is a global leader in information management services, offering solutions for storing, protecting, and managing physical and digital assets. Founded in 1951 and headquartered in Boston, Massachusetts, Iron Mountain provides secure storage facilities, data centers, and comprehensive records management services to businesses and organizations worldwide.
Not only will the huge data storage requirements for AI work provide a steady stream of new revenues to Iron Mountain, but the technology will also likely improve the company operations. This means better margins in the future as well.
Analysts have been raising earnings estimates for Iron Mountain over the last two months, giving it a Zacks Rank #1 (Strong Buy) rating. Additionally, growth at the data storage giant is expected to grow at a very nice pace, with sales projected to climb 10.9% this year, and earnings to grow 7.3%.
Image Source: Zacks Investment Research
Iron Mountain has long been a steady performing stock, compounding at 11.6% annually over the last ten years, while also paying out a hefty dividend through that period. Today, the stock yields 3.3% in dividends.
Also worth noting is the convincing technical trade setup building on IRM stock. Over the last month, the price action has been building out a picture-perfect bull flag, and if the stock can breakout above the $80 level, will likely send it to new all-time highs.
Image Source: TradingView
Constellation Energy Corporation
Constellation Energy Corporation (CEG - Free Report) is a prominent energy company headquartered in Baltimore, Maryland. It specializes in providing electricity, natural gas, renewable energy, and energy management solutions to residential, commercial, and industrial customers throughout the United States. Notably, Constellation Energy has a significant presence in the nuclear energy sector and is one of the best ways of getting exposure to the industry.
Because of the tailwinds in the nuclear energy industry, Constellation Energy enjoys another major bullish catalyst.
CEG has experienced some significant revisions to its earnings estimates, giving it a Zacks Rank #2 (Buy) rating.
Image Source: Zacks Investment Research
Since the start of the year, Constellation Energy Corporation stock has seen considerable buying, making it the best performing stock in the Utilities sector ETF (XLU - Free Report) , and one of the best in the broader market.
Image Source: TradingView
And even though the stock has appreciated so much, the company is still trading at a fair valuation, which should reassure investors that they haven’t missed the boat.
Constellation is trading at a one year forward earnings multiple of 26.1x, which is above both the market and its two-year median of 20.4x. However, EPS are forecast to grow at an impressive 28% annually over the next 3-5 years, meaning CEG has a PEG ratio of 0.9, indicating a discount based on the metric.
Image Source: Zacks Investment Research
Bottom Line
Although it may seem all the juice has been squeezed from this AI lemon, I assure you that it likely has not. This boom may touch more industries and stocks than you can imagine, and the broader and more creatively you can think of the effects, the more unique stocks you can find to express your thesis.
Based on my own research, both Constellation Energy Corporation and Iron Mountain are two unconventional AI-adjacent stocks to consider.
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2 Top Ranked Stocks Riding the AI Wave Unnoticed
I think many investors are still underestimating how significant the Artificial Intelligence boom is, and how broadly it will affect markets. While we all know the primary beneficiaries of AI, like Nvidia (NVDA - Free Report) , Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) , there are a litany of industries and companies that will feel the ripples of this new technology.
From semiconductor designers and producers to network distributors, data storage companies, and energy production. Yes, the AI boom may be so significant that the utility companies providing power to the technology companies will benefit from the increase in demand.
This fact has not been missed by the mega-cap tech companies, as both Microsoft and Amazon have acquired small energy production companies to power their server farms. Furthermore, there has been a particular focus on a certain type of energy production, Nuclear.
In the article below, I will share two top ranked stocks that represent ancillary ways to get exposure to the AI boom. One is an energy producer, and the other is a REIT (Real Estate Investment Trust) that caters to IT businesses. Because these companies seem so far from AI epicenter, I believe some investors are overlooking their potential.
Image Source: Zacks Investment Research
Iron Mountain
Iron Mountain (IRM - Free Report) is a global leader in information management services, offering solutions for storing, protecting, and managing physical and digital assets. Founded in 1951 and headquartered in Boston, Massachusetts, Iron Mountain provides secure storage facilities, data centers, and comprehensive records management services to businesses and organizations worldwide.
Not only will the huge data storage requirements for AI work provide a steady stream of new revenues to Iron Mountain, but the technology will also likely improve the company operations. This means better margins in the future as well.
Analysts have been raising earnings estimates for Iron Mountain over the last two months, giving it a Zacks Rank #1 (Strong Buy) rating. Additionally, growth at the data storage giant is expected to grow at a very nice pace, with sales projected to climb 10.9% this year, and earnings to grow 7.3%.
Image Source: Zacks Investment Research
Iron Mountain has long been a steady performing stock, compounding at 11.6% annually over the last ten years, while also paying out a hefty dividend through that period. Today, the stock yields 3.3% in dividends.
Also worth noting is the convincing technical trade setup building on IRM stock. Over the last month, the price action has been building out a picture-perfect bull flag, and if the stock can breakout above the $80 level, will likely send it to new all-time highs.
Image Source: TradingView
Constellation Energy Corporation
Constellation Energy Corporation (CEG - Free Report) is a prominent energy company headquartered in Baltimore, Maryland. It specializes in providing electricity, natural gas, renewable energy, and energy management solutions to residential, commercial, and industrial customers throughout the United States. Notably, Constellation Energy has a significant presence in the nuclear energy sector and is one of the best ways of getting exposure to the industry.
Because of the tailwinds in the nuclear energy industry, Constellation Energy enjoys another major bullish catalyst.
CEG has experienced some significant revisions to its earnings estimates, giving it a Zacks Rank #2 (Buy) rating.
Image Source: Zacks Investment Research
Since the start of the year, Constellation Energy Corporation stock has seen considerable buying, making it the best performing stock in the Utilities sector ETF (XLU - Free Report) , and one of the best in the broader market.
Image Source: TradingView
And even though the stock has appreciated so much, the company is still trading at a fair valuation, which should reassure investors that they haven’t missed the boat.
Constellation is trading at a one year forward earnings multiple of 26.1x, which is above both the market and its two-year median of 20.4x. However, EPS are forecast to grow at an impressive 28% annually over the next 3-5 years, meaning CEG has a PEG ratio of 0.9, indicating a discount based on the metric.
Image Source: Zacks Investment Research
Bottom Line
Although it may seem all the juice has been squeezed from this AI lemon, I assure you that it likely has not. This boom may touch more industries and stocks than you can imagine, and the broader and more creatively you can think of the effects, the more unique stocks you can find to express your thesis.
Based on my own research, both Constellation Energy Corporation and Iron Mountain are two unconventional AI-adjacent stocks to consider.