20 Industrial Stocks Already Riding the AI Wave

8. nVent Electric plc (NYSE:NVT)

Number of Hedge Fund Holders: 61

YTD Return as of August 1: 24%

Approximate Percentage Revenue from AI: 22%

nVent Electric plc (NYSE:NVT) designs, manufactures, markets, installs, and services electrical connection and protection solutions. The firm is emerging as an important player in the AI space as it offers cooling solutions for data centers. Since AI firms rely on fast data processing, the chips they use to process the data often get hot. Traditional air cooling methods are not always the best solution for firms who are increasingly looking towards building smaller but more capable data centers. The liquid cooling solutions offered by the company save energy, enable firms to put more machines in a smaller space, and have better overall value since they come without hefty maintenance charges typical of air cooling systems.

Beth Wozniak, the CEO of nVent Electric plc (NYSE:NVT), noted during the first quarter earnings call that the company was witnessing an acceleration in demand for data solution products, a change she attributed to the AI trend sweeping the markets across the globe. Wozniak highlighted the liquid cooling solutions offered by the firm in particular during the call, describing the growth trends due to AI as strong.

In its Q1 2024 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and nVent Electric plc (NYSE:NVT) was one of them. Here is what the fund said:

“Our top contributors were NVent Electric plc (NYSE:NVT), Corebridge Financial and Lamar Advertising. nVent Electric provides electrical connections and protection solutions. These are mission-critical elements in commercial electrical and mechanical systems and civil infrastructure. nVent has shown consistent and steady growth since the pandemic, having reported 12 consecutive quarters of year-over-year sales growth supported by the secular tailwinds of electrification, sustainability and digitalization. Growth has come from a combination of volumes and pricing, with the company successfully offsetting inflation with pricing. Due to the low cost of its products relative to a project and high failure costs for customers, nVent has good pricing power and sustainable margins. In the recent quarter, the company’s data centers business (~14% of sales) was a standout, growing 20% year over year, as the acceleration in artificial intelligence infrastructure investments has created increased demand for the company’s liquid cooling solutions. Though nVent is no longer selling as cheaply as when it first drew our interest, the stock still sells at a lower P/E multiple than the S&P 500® Index despite better earnings growth.”