TRG | The Bottom Line – 8/22

Google recently released an environmental study on their AI impact (Gemini) that claimed an average prompt uses only 5 drops of water (less energy than watching 9 seconds of TV). While this figure is debatable in the way it is being calculated, it highlights the importance of and dependence on water in the AI race and data center buildout. TRG continues to focus on the critical infrastructure that AI and reindustrialization is driving, a theme we highlighted this week in our note “Thirsty For Water: A Look at Water Infrastructure Demand”. Public and private companies with exposure to water infrastructure are seeing continued demand across a variety of sources from data centers to highway construction to eventual residential buildout. Water infrastructure related PIP accounts for $85B of non-res construction PIP’s total $1.2T and is a larger category than healthcare, office, and data centers. TRG as a firm is focusing our research efforts on the infrastructure build out of AI and reindustrialization, and looking for the non-obvious beneficiaries that could see ongoing demand. Water is just one example where we expect to see winners. Stay tuned on updates on water infrastructure trends in coming weeks with water infrastructure distributors CNM and FERG, both reporting earnings in early and mid-September. 

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