Data Center Stocks: Bank of America’s Electical Infrastructure Picks

Bank of America ranked 67 data center infrastructure beneficiaries, highlighting Asia and Europe suppliers of printed circuit boards, electrical systems, cables, and server hardware. Ibiden also reported Q4 2025 EPS of 117.14 and revenue of 117.58 billion, topping analyst forecasts. The piece is primarily a stock-selection and sector-positioning note, with limited market-moving new information beyond the earnings beat.

Analysis

The market is starting to price data-center spend as a selective infrastructure cycle rather than a pure AI semiconductor trade. That matters because the marginal beneficiaries shift from the obvious compute names to the less crowded bottlenecks: power delivery, cables, PCB density, thermal management, and electrical automation. In practice, this broadens the winners’ list and should support a second-leg rally in industrial electrification names even if GPU multiples stay under pressure.

The near-term risk is that investors extrapolate one more quarter of capex into a multi-year straight line and overpay for “AI infrastructure” without distinguishing lead times. Power and grid equipment can rerate for months because utilities and hyperscalers are locked into build plans, but PCB and server suppliers are more exposed to order digestion once customers normalize inventory. The right lens is not demand direction but demand durability: names tied to power transmission and facility build-out should be more resilient than those tied to incremental server unit growth.

A key second-order effect is margin compression for OEMs and integrators if component bottlenecks tighten. If grid hardware, cables, or high-layer boards become constrained, hyperscalers can still spend, but delivery schedules slip and working capital rises, which often pushes the market to punish system assemblers before the component suppliers. That creates a useful relative-value setup between “enablers” of the build and “owners” of the compute narrative.

The contrarian angle is that the market may be underestimating how much of this spend is now defensive, not discretionary. If AI data-center buildouts are increasingly framed as power-availability projects, then valuations for electrical infrastructure names can remain supported even if AI enthusiasm cools. The risk to that view is a capex pause from the largest cloud buyers, which would hit the more cyclical hardware names first and could unwind the trade over 1-2 quarters.

Key Decisions for Investors

• Go long PWR on a 3-6 month horizon as a cleaner proxy for grid and electrical buildout than semis; target 10-15% upside if infrastructure spending stays elevated, with downside limited to a capex pause narrative.
• Pair long power/infrastructure exposure with short a basket of more cyclical AI hardware suppliers over the next 1-2 quarters; the trade benefits if order growth slows while build-out commitments remain intact.
• Use pullbacks in cable and power-equipment names as entries rather than chasing momentum; these businesses have longer backlog visibility and should hold up better on any 5-10% correction in the AI complex.
• Avoid adding to pure server/compute exposure here unless there is confirmation of sustained order growth; those names carry the highest risk of multiple compression if hyperscaler capex normalizes.
• If the market sells off AI broadly on policy/tax headlines, rotate into electrical infrastructure names as a defensive growth sleeve; the payoff is asymmetric because the underlying capex is tied to grid constraints, not just AI sentiment.