Forget AI Stocks: This Infrastructure REIT Is Wall Street's Secret Weapon

AI stocks have been the hot trade over the past year. That's due to surging demand for chips by companies building AI models and applications.

However, chips and related hardware are only part of the AI story. Companies need infrastructure to house all this high-tech hardware and transmit all their AI-related data. That plays right into American Tower's (NYSE: AMT) strategy. The infrastructure REIT is quietly building data centers to support AI workloads. In doing so, it's about to become Wall Street's secret weapon.

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Hiding in plain sight

American Tower is one of the world's largest REITs. It's a leading independent owner, operator, and developer of multitenant communications real estate with a global portfolio of over 149,000 sites. Additionally, it owns a highly interconnected footprint of U.S. data center facilities.

The REIT bought its data center platform in 2021 through its $10.1 billion acquisition of CoreSite. The data center REIT owned 25 data centers across eight major U.S. markets. While it was a sizable deal, it wasn't a major deviation from the REIT's strategy. American Tower bought CoreSite to support the accelerating global deployment of 5G networks. The deal followed its $9.4 billion purchase of Telxius Towers earlier in the year and its $3.5 billion purchase of InSite Wireless Group the previous year. 5G was also the primary focus of those tower deals.

Building a secret weapon to capitalize on AI

While 5G was the initial rationale behind buying CoreSite, the company has since started to leverage its expertise in building data centers to develop facilities for AI. Last month, CoreSite announced the launch of native 400 Gbps (400G) Amazon Web Services (AWS) Direct Connect at its Chicago data center campus. That made it an ideal location for high-bandwidth, performance-intensive workloads such as AI applications, including training, interface, and agentic automation. The company now has three locations with 400G capabilities.

Several CoreSite customers are already capitalizing on the advantages of 400G connectivity. For example, a leading cybersecurity company is leveraging it to process large quantities of data and accelerate real-time threat analysis.

Additionally, several financial firms are evaluating 400G to deliver the speed and reliability they need for high-speed trading and quantitative research. As a result, American Tower's data centers could soon become Wall Street's secret weapon for boosting returns. By securing space in one of these CoreSite facilities, these financial firms will be able to accelerate the modernization of their IT and scale their AI operations, thereby saving time and money.

The hidden AI stock that could be the secret to Wall Street's success

Wall Street's financial firms are racing to capitalize on AI to improve their trading and performance. American Tower's data centers could hold the secret weapon to their future success. The REIT is building high-speed, interconnected facilities that are ideally suited to the needs of financial firms.

Most investors haven't yet caught on to the AI-driven growth potential hidden in American Tower's portfolio. That makes the REIT an under-the-radar way to capitalize on AI, as it helps more companies leverage this powerful technology to enhance their operations. The continued expansion of its data center platform could enable this REIT to deliver towering returns in the coming years.

Matt DiLallo has positions in American Tower. The Motley Fool has positions in and recommends American Tower. The Motley Fool has a disclosure policy.