Investment trust insider on the data centre boom – James Carthew: Trusts set to thrive from the data centre boom
Managers are eyeing up ways not only to benefit from skyrocketing data centre investment, but on how to address its negative consequences too.
Many investment companies are getting excited about the prospects of the data centre market, as I highlighted with the burgeoning opportunities with Tritax Big Box Reit (BBOX) last week.
This market is being supercharged by explosive growth in AI, with Gartner estimating at the start of this year that global spending on data centres would rise from $329.1bn in 2024 to $405.5bn in 2025. By July, it had revised that figure up to $474.9bn.
However, there are some knock-on effects of this that we need to think about.
The most obvious is the demand for power. At the end of 2024, the US Department of Energy forecast that data centres would account for up to 580TWh by 2028 (up from 58TWh in 2014, and equivalent to about 12% of US electricity supply).
Within the investment trust market, there are not that many ways of playing this. Many investors tend to dismiss utilities as boring interest rate plays.
But it was telling that Polar Capital Technology (PCT) spotted the opportunity. It opted to get exposure to the theme by buying companies such as Siemens Energy and GE Vernova, which are benefitting from the drive to build new power plants and have risen in value by 222% and 140% respectively over the past 12 months.
Ecofin Global Utilities and Infrastructure (EGL) has also benefitted. Its share price is up over 20% this year, helped by… read more here