How Kingspan stands to benefit from AI boom – The Irish Times
Reports over the weekend highlighted concerns about the latest advancements in artificial intelligence (AI), with OpenAI’s ChatGPT allegedly disregarding human instructions. Despite the potential risks, the rapid evolution of AI technology is undeniable.
McKinsey recently projected a substantial increase in global spending on data centers by 2030, primarily driven by the escalating demand for AI processing capabilities. Specifically, AI-related requirements are anticipated to necessitate a significant investment in data centers, estimated at $5.2 billion.
Kingspan's Role in the AI Revolution
One company well-positioned to capitalize on this emerging trend is Kingspan, a Cavan-based organization. Kingspan's data solutions division, specializing in raised access flooring, structural ceilings, and airflow solutions tailored for data centers, experienced a notable upsurge in trading profit, surging over 50% to nearly €78 million last year, constituting 8.6% of the total profits.
Analysts, including Goodbody Stockbrokers' Shane Carberry, project substantial growth for Kingspan's data solutions unit. Carberry forecasts a growth rate exceeding 30% by 2025, with an estimated trading profit of €200 million by 2027, marking a fourfold increase from 2023 levels.
Recent industry developments, such as Samsung Electronics' acquisition of FläktGroup, a German provider of heating, ventilation, and air-conditioning solutions for data centers, underscore the potential value within Kingspan's data solutions segment. Carberry suggests that this unit could be valued at €4.25 billion, equivalent to about a third of Kingspan's current market capitalization.
Market Perception and Potential
Despite the promising outlook, stock market investors have exhibited caution, with Kingspan's stock declining by 17% over the past year, in contrast to a 13% increase in the Iseq All-Share index. Economic uncertainties on a global scale have contributed to this hesitancy.
