The promise of artificial intelligence (AI) consumed investor interest over the past few years, sending many tech stocks soaring beyond rational valuation levels – and leaving most other sectors in the dust. Perception – not current capital spending, free cash flows or next year’s revenue growth – drove prices. Looking at these metrics, no one should have been buying.
But it appears the buying frenzy has abated in early 2026, as AI stocks suffered a sharp correction with software stocks and “Magnificent 7” (Mag 7) AI players under immense pressure. Investors finally questioned the massive capital investments and the ROI. Many are calling this a “healthy” rotation, not a doomsday scenario. The markets are reflecting much the same sentiment, with the Mag 7 still controlling nearly 32.6% of the S&P 500 Index (down from 35%+ peak reached in late 2025). Bellwether NVIDIA Corp. continues to produce record-breaking financial growth driven by the AI data center boom, though its stock price flattened compared to previous year rallies.
More discriminating analysis is emerging – and this is where we step into the fray. Avoiding the stocks most susceptible to “boom-bust” cycles means a deep dive into ancillary products/services globally that play into the AI field – and we are happy to report that many fall into the “value” category.
The most obvious play is the buildout supporting AI, as large language model intelligence depends entirely on logic chips and components. Memory suppliers — primarily Micron Technology, Inc. and South Korea’s SK hynix Inc. and Samsung Electronics Co. Ltd. — may benefit from continued demand by hyperscalers, sovereign nations, and industrial companies building AI infrastructure. Sk hynix is a memory supplier to Nvidia, with Samsung expected to win a deal to supply advanced high bandwidth memory (HBM4) for the top end of Nvidia’s next-generation AI processors. Hyperscalers are also investing heavily in networking chips (Ethernet switches, SmartNICs) to solve data movement bottlenecks that currently limit AI performance.
AI chips cannot exist without the highly specialized machines that build them. For every $100 billion invested in AI data centers, roughly $8 billion flows directly to the wafer fabrication market. And there are niche players here as well, like U.S.-based MKS Inc., which supplies critical subsystems/foundational tech that make fabrication possible. These work-horse companies are often overshadowed by the chipmakers themselves despite being indispensable to the supply chain.
Further downstream are the hardware distributors that bridge the gap between chip suppliers and the industries clamoring for AI solutions. But chip makers/suppliers/distributors aren’t the only ones to capitalize…
Consider “old meets new economy” companies in non-tech sectors.
MATERIALS: The rapid expansion of AI data centers is acting as a major catalyst for the industrial and materials sectors, creating a “gift that keeps on giving” effect by driving unprecedented demand for construction and raw materials (aluminum, cement, steel, copper). As of late 2025, data center construction is the primary driver of nonresidential construction spending growth in the United States. Polaris owns Canadian copper miner Lundin Mining Corp., which is expanding its portfolio to meet the surge in AI demand, which some analysts predict could drive global copper consumption 50% higher by 2040.
INDUSTRIALS: Spending on the required industrial equipment needed to run new data centers could total $1.5 trillion by the end of the decade, consulting firm McKinsey & Company estimates. AI-optimized data centers require more power and cooling than standard facilities, as large-language models run continuously during training phases. This creates demand for electrical and mechanical equipment, HVAC systems, power distribution infrastructure, and cooling solutions to run all the servers and tech gear.
South Korea’s HD Hyundai Electric Co., Ltd. supplies critical electrical equipment such as high-voltage transformers and 145kV Dead Tank Breakers specifically for global data centers. The company has seen significant growth in 2025 due to the surge in AI investments requiring robust power infrastructure. U.K-based Volution Group PLC acquired AC Industries of Australia, a provider of ducting solutions for copper and gold mines (playing into the materials demand above). And its core market of energy-efficient indoor ventilation systems will likely garner attention from the AI data centers.
And all data centers need to be tied back into the electrical grid with transmission lines or powered by mobile generation solutions. The power and electricity needs are enormous… leading to our next “value play”.
UTILITIES: After years of flat or shrinking power demand around the developed world, the staid utilities sector may need to spend more on both power generation and transmission projects to meet the growing demand from AI data centers. And currently, access to sufficient power has constrained some data center construction, which we believe means there is pent-up demand still to be unleashed. Bain & Co., a U.S. consultancy, forecasts that utilities will need to increase annual energy generation by as much as 26% above 2023 levels by 2028 to meet projected demand.
All this new power demand will require a modernized electrical grid, greater generation facilities and equipment like gas turbines and green energy alternatives (even extending to fuel cell and energy management firms) given grid capacity constraints.
U.S.-headquartered NextEra Energy, Inc. received the necessary regulatory green light to build a high-voltage transmission line spanning 220 miles at 765 kV, developed in collaboration with Exelon to bolster power grid reliability across the Mid-Atlantic region. NextEra also teamed up with Xcel Energy to accelerate energy delivery to large-scale consumers, particularly AI data centers. These initiatives reflect NextEra’s strategic push to address surging AI-driven electricity demand while strengthening the stability of regional power infrastructure.
Spain has well-developed and diverse sources of clean power, including plenty of hydroelectric power; the AI hyperscalers have targeted the country for significant data center growth. However, Spain’s power utilities lobby notes that 83% of the country’s grid nodes are nearing saturation. Rather than being constrained by this bottleneck, Endesa, S.A.’s diversified, low-carbon generation mix (nuclear power and renewable energy) positions it to offer an alternative path forward. With targets to expand green capacity to 13.1 GW by 2027, Endesa is leveraging its scale and clean energy assets to relieve grid pressure and supply the AI-driven data centers reshaping Spain’s electricity landscape.
ENERGY: Natural gas companies are carving out a new niche in the AI economy. Because always-on data centers cannot tolerate the intermittency of wind and solar, they need the kind of dispatchable, round-the-clock power that natural gas reliably provides — and midstream giant The Williams Companies, Inc. is betting heavily on that reality.
Williams has committed more than $5 billion to modular, gas-fired turbine plants designed to feed power directly to data centers rather than routing it through an already-strained electrical grid. This “behind-the-meter” approach lets hyperscalers bypass lengthy grid interconnection queues, which can stretch years. Williams’ Transco pipeline system, which carries roughly 16% of U.S. natural gas consumption, runs through some of the most data center-dense corridors in the country (i.e. Northern Virginia) and the company has expansion plans underway to serve that demand.
On the power generation side, Williams’ most prominent project is the roughly $2 billion “Socrates” facility in Ohio, a 440-megawatt plant for Meta, while two additional AI-focused generation projects are in development. Historically a pure midstream operator, Williams aims to become a “one-stop energy partner” for hyperscalers and AI data centers. It is exploring the acquisition of upstream gas-producing assets that would let it bundle fuel supply with its existing transportation, storage, and power generation capabilities.
As value investors, the rise in AI is not just a tech growth “story”. There are many chapters earmarked to construction, electrical equipment and power generation. While many investors lament missing the initial AI wave, compelling opportunities remain for those willing to look beyond the headlines — often at far more attractive valuations. Recent market volatility may be opening that book for value-oriented investors.
This blog was penned by Jason Crawshaw, EVP and Portfolio Manager, in March 2026. Mr. Crawshaw joined the firm in January 2014 as an Analyst. In 2015, he became an LLC member and was named an Assistant Portfolio Manager in 2016. He was promoted to Portfolio Manager in January 2021 and was named the firm’s Executive Vice President in late 2023. Mr. Crawshaw is a generalist and conducts fundamental analysis of potential investment opportunities. He brings 30+ years of investment industry experience to the firm.
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