Reports over the weekend that artificial intelligence (AI) group OpenAI’s latest ChatGPT has been caught ignoring human instructions to shut down may be the stuff of apocalyptic nightmares. Yet the AI genie is well out of the bottle at this stage.
McKinsey, the management consultancy firm, estimated in a recent report that $6.7 trillion (€5.9 trillion) will need to be spent on data centres globally by 2030, driven by demand for hubs equipped to handle AI processing loads. AI demand alone will require $5.2 billion of data centres investment, it said.
One Dublin-listed company that should be a major play for investors in this trend is Kingspan, analysts say.
The Cavan-based group’s data solutions division, which designs and makes raised access flooring, structural ceilings, and airflow solutions for data centres, saw its trading profit jump more than 50 per cent last year to almost €78 million to make up 8.6 per cent of total profits.
Goodbody Stockbrokers analyst Shane Carberry estimates the unit’s profits could grow by more than 30 per cent in 2025.
He said in a note to clients in recent days that the division is on track to deliver €200 million in trading profits by 2027, a fourfold increase on 2023.
Carberry said a deal struck earlier this month – Samsung Electronics’s agreement to buy German heating, ventilation and air-conditioning provider to data centres, FläktGroup – points to some serious value in Kingspan’s data solutions business. He reckons the unit could be worth €4.25 billion, based off the value of the FläktGroup and its estimated earnings.
That equates to about a third of Kingspan’s current market value. The €4.25 billion valuation implied by the German deal suggests the market is applying a “gross undervaluation” to the wider group, based off consensus earnings estimates for 2027.
“The data centre ‘boom’ is no secret and it is clear that companies like Samsung Electronics are trying to take advantage but having to pay hefty multiples to do so,” he said. “We believe that few are better placed than Kingspan to capitalise on this mega trend.”
Still, stock market investors remain cautious for now – with the stock down 17 per cent over the past 12 months, compared with a 13 per cent advance by the Iseq All-Share index – amid concerns about the wider global economy.
