Harnessing the AI Boom with Essential ASX Infrastructure Providers

As the Artificial Intelligence (AI) wave sweeps across various industrial landscapes, investors are broadening their scope to identify ‘pick and shovel’ stocks in the ASX that stand to gain from the burgeoning AI sector. Such companies, akin to the entrepreneurs selling tools during historic gold rushes, are not directly involved with AI but provide critical services or infrastructure propelling the technology forward.

Key ASX Infrastructure Stocks in the Spotlight

Two notable candidates surfacing to anchor the growth in AI are Southern Cross Electrical Engineering Ltd (ASX: SXE) and IPD Group Ltd (ASX: IPG). These firms furnish the foundational elements requisite for advanced AI operations.

• Enhanced Data Centre Capabilities: With AI and cloud computing’s reliance on robust data centres, electrical infrastructure becomes paramount, a domain where these companies excel.
• Expanding Market Demand: The rapidly advancing AI landscape ensures an enduring demand for their specialized services, thus propelling their financial projections positively.

Market Trends and Financial Forecasts

Southern Cross Electrical Engineering has seen a near 140% stock price upsurge over the past year, with projected sustainable growth beyond FY26. IPD Group’s involvement in essential electrical infrastructure projects, especially those catering to data centres, positions it well for the increased demand for AI-driven energy management and automation.

• Southern Cross Electrical Engineering’s Acquisition Moves: The acquisition of MDE Group and the anticipated FY24 EBITDA guidance uplift to $53 million signal strategic growth.
• IPD Group’s Strategic Acquisitions: Recent acquisitions, including EX Engineering and CMI Operations, have strengthened its positioning in the industry, with a projected FY24 EBITDA ranging between $39 million to $39.5 million.

Final Thoughts on AI-Related ASX Investments

Investing in companies like Southern Cross Electrical Engineering and IPD Group allows participation in the AI revolution without direct involvement in the technology itself. Their roles in providing the infrastructure and services that AI technologies require position them as savvy investment choices for those looking to benefit indirectly from the comprehensive growth of AI.

While considering such investment opportunities, it is crucial to align with individual financial circumstances and long-term investment goals.