As defense-adjacent defense demand reshapes industrial supply chains, private capital is placing its own bets on the physical infrastructure underlying artificial intelligence — and at least one high-performing fund manager believes the biggest winners may be hiding in plain sight within the industrials sector. According to reporting by Business Insider, a fund manager whose portfolio ranks in the top two percent of peers has identified four industrial companies he expects to benefit materially from the accelerating buildout of AI data centers across the United States.

The manager’s thesis centers on a straightforward but often overlooked observation: building, cooling, and powering the massive computing facilities that AI workloads demand requires an enormous volume of physical goods and industrial services — electrical components, HVAC systems, construction materials, and the specialized labor to deploy them. That demand, he argues, is structural rather than cyclical, meaning it will persist well beyond the initial wave of hyperscaler capital expenditure announcements.

Four Stocks, One Common Thread

Business Insider’s reporting details the four specific companies the fund manager has identified, all of which he characterizes as undervalued relative to their exposure to data center construction tailwinds. While the publication names the individual equities, the common thread across the picks is positioning within electrical infrastructure, thermal management, and industrial components — precisely the subsectors facing the steepest supply constraints as technology companies race to bring new data center capacity online.

The manager emphasizes that these stocks remain cheap by conventional valuation metrics even as their end-market demand has strengthened, a divergence he attributes to broader investor skepticism about whether AI capital spending will translate into durable industrial revenue. His view is that the translation is already underway, and that the market has been slow to reprice the beneficiaries accordingly. He told Business Insider he expects the gap to close as earnings reflect the buildout’s momentum through 2026.

Industrial Sector Exposure to AI Spending

The broader argument reflects a growing consensus among institutional investors that the AI infrastructure cycle is generating demand comparable in scale to prior generational buildouts — rail electrification, interstate highway construction, or the original internet backbone expansion. Electrical grid equipment, in particular, has become a chokepoint, with transformer lead times extending significantly as utilities and private data center operators compete for the same limited manufacturing capacity. The industrials stocks the fund manager favors sit within or adjacent to that supply constraint, giving them pricing power that their current valuations have not fully absorbed.

The strategic parallels extend beyond private markets. As venture capital firms deepen their commitments to AI-adjacent technology investment, the competition for physical infrastructure capacity is intensifying across both commercial and government sectors. The Pentagon and allied defense establishments are themselves expanding their reliance on AI-enabled systems, creating a secondary layer of data center and compute demand that sits alongside — and occasionally competes with — commercial hyperscaler buildout for the same industrial inputs. Whether that convergence ultimately benefits or pressures the industrial suppliers the fund manager has selected will depend significantly on how quickly domestic manufacturing capacity can scale to meet both markets simultaneously.