The digital gold rush of the twenty first century isn’t taking place within the mines – it’s taking place in large, high-tech warehouses full of servers. As Synthetic Intelligence (AI) and cloud computing demand skyrocket, the bodily infrastructure required to energy these applied sciences is present process a historic enlargement that has lifted some Canadian development shares to all-time highs.
As soon as an estimated US$650 billion AI information centre spend earlier this yr, latest first-quarter (Q1 2026) numbers present the big-four hyperscalers – Meta Platforms, Alphabet, Amazon, and Microsoft – could spend north of $725 billion in mixed capital investments this yr to construct the information centre infrastructure to satisfy surging demand for AI inference duties. Part value inflation contributed to elevated budgets.
The information centre buildout alternative is increasing in 2026, and energy transformers and power-quality gear are a part of the first bottlenecks the AI trade is battling. On the coronary heart of this AI infrastructure increase is a quiet titan of the facility elements trade: Hammond Energy Options (TSX:HPS.A).
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The $725 billion tailwind
The worldwide information centre market is accelerating at a tempo that has blindsided even essentially the most bullish analysts. In early 2026, projections for hyperscaler capital expenditure hovered round US$650 billion. Nevertheless, following the Q1 2026 earnings season, that determine has jumped to $725 billion, with some estimates for the “Huge 5” (Amazon, Microsoft, Google, Meta, and Oracle) now reaching as excessive as $805 billion.
Knowledge centres are infamous “energy hogs,” requiring specialised electrical gear to step down high-voltage grid energy into the exact ranges wanted for delicate server racks. That is the place Hammond Energy Options enters the body.
Hammond Energy Options (HPS) inventory rides the AI information centre wave
Hammond Energy Options has seen its dry-type transformers and energy high quality merchandise promote hotly as the information centm buildout positive factors momentum. The Canadian AI development inventory’s trajectory is explosive. In its Q1 2026 outcomes launched Tuesday, Might 5, HPS reported file quarterly gross sales of $265 million, a 31.5% improve yr over yr. Gross margins expanded sequentially from 29.2% to 30.1% regardless of nagging tariff impacts as the corporate manages value pressures and improves manufacturing facility overhead absorption at its not too long ago constructed Mexico facility. Adjusted earnings per share for the quarter elevated by practically 30% to $2.08.
“HPS delivered a powerful first quarter, with file gross sales pushed by continued power within the U.S. and Mexico, significantly in customized product shipments and information centre-related exercise,” famous CEO Adrian Thomas in Tuesday’s earnings launch. He highlighted that whereas customary product gross sales are wholesome, they’re being outpaced by higher-margin customized merchandise designed particularly for the rigorous calls for of AI-ready information centres.
Most impressively, Hammond Energy’s order backlog has surged by practically 95% year-over-year, pushed nearly fully by large-scale initiatives within the information centre area. New challenge wins are bigger, and capability is turning into a big bidding issue for brand new enterprise.
Administration is already contemplating new facility builds to satisfy robust buyer demand, however it might be two years earlier than new amenities come on-line.
Is HPS inventory a purchase proper now?
Hammond Energy Options inventory remains to be in regular development mode. New buyers may journey its income and earnings development wave as the corporate executed in the direction of a long-term income goal of $1.7 billion by 2029. With a ahead P/E round 27, HPS inventory may nonetheless be pretty valued given a ahead price-earnings-to-growth (PEG) ratio of 1.1.
That mentioned, it’s up greater than 80% year-to-date and HPS inventory has surged to new all-time highs. Consolidation could possibly be doubtless at any level if backlog development continues to decelerate. The backlog, which administration doesn’t specify in stable greenback quantities, maybe resulting from cancellation dangers, grew solely 4.1% sequentially in the course of the previous quarter, and lumpy orders could also be far between as administration seeks to develop manufacturing capability – a course of which will take two years to finish.
Hammond Energy is ready to make a fortune from the information centre construct out. I’ve been bullish on Hammond Energy inventory as a Purchase for 2026, however following its 80% surge, I’m snug inserting a Maintain score on the expansion inventory for now as HPS finds sustainable methods to satisfy information centre buyer wants whereas diluting tariff impacts on its margins.
