European Industrial Stocks Surge on AI Investment Boost
European industrial stocks, such as Schneider Electric and Prysmian, experienced significant gains on Wednesday following the announcement of a substantial investment in artificial intelligence (AI) infrastructure by the United States government.
U.S. AI Investment Spurs Demand for Infrastructure Providers
President Donald Trump's unveiling of a private-sector investment of up to $500 billion in AI infrastructure ignited a wave of buying in companies involved in building and connecting the technology's underlying architecture.
Schneider Electric and Prysmian Reach Record Highs
Schneider Electric, a French supplier of electrical equipment and data center infrastructure, surged 3.4% to a record high in Paris. The company's recent acquisition of Motivair, a U.S. specialist in liquid cooling solutions for data centers, and partnership with Nvidia to develop cooling systems are contributing to its success.
Prysmian, an Italian cable manufacturer, also hit a lifetime peak, gaining 3.3%. The company's acquisition of Encore Wire in the U.S. and its ongoing M&A prospects in the data center components space are driving its growth.
Ripple Effect of AI Investment
The investment is expected to have a positive ripple effect on the power grid, expanding beyond the direct impact on industrial and construction businesses. A Prysmian spokesperson highlighted this potential.
Other Beneficiaries
Shares in Siemens Energy and ABB, German providers of electrical hardware for AI infrastructure, also rose significantly, reaching new highs of 7.5% and 3.1%, respectively.
Europe's Tech Exposure
These companies align with investment strategies focused on electrification, data centers, and energy transportation infrastructure, benefiting from the growing trend towards AI, electric vehicles, and related advancements. Angelo Meda, head of equities at Banor SIM in Milan, emphasized their significance for European investors seeking exposure to these trends in the absence of domestic tech giants.
Overall Market Impact
Despite these gains, the broader STOXX 600 index remained relatively unchanged, indicating the impact of the AI investment was largely confined to the industrial sector.