Canada’s artificial intelligence data centre buildout has moved from policy documents to actual construction, pulling investor attention toward the suppliers of power and electrical equipment that every facility needs. Two companies stand out: Capital Power (TSX:CPX), a power generator, and Hammond Power Solutions (TSX:HPS.A), a transformer manufacturer.
A data centre is essentially a computing factory. Servers do the work, but they require enormous amounts of uninterrupted electricity and generate enough heat to make cooling a full-time occupation. Transformers, backup systems, transmission connections and construction crews are equally important. Natural Resources Canada estimates that AI data centre electricity demand could reach three to five gigawatts by 2030. One gigawatt is roughly the output of a large power plant, meaning Canada is adding a new class of industrial electricity customer.
Capital Power owns and operates generation assets across Canada and the United States, including natural gas, wind and solar, capable of supplying the around-the-clock power data centres require. In July, the company signed an agreement to provide 250 megawatts of capacity and energy to Meta’s Sturgeon County data centre in Alberta. The contract runs for more than 10 years, is expected to begin in the second half of 2028, and requires no new capital investment from Capital Power. Second-quarter adjusted funds from operations reached $328 million, up from $235 million a year earlier. The company’s newly increased annual dividend of $2.80 per share yields roughly 4.3% at the time of writing, offering income while investors wait for the Meta contract and potentially more hyperscale customers to contribute.
Capital Power is not without risk. It reported a quarterly net loss, carries debt from recent acquisitions, and remains exposed to electricity prices, outages and regulation. The Meta load will not arrive until 2028. Still, the agreement shows how dependable Canadian utility stocks could become unexpected beneficiaries of rising computing demand.
Hammond Power Solutions, based in Guelph, Ontario, manufactures transformers and related electrical equipment that convert power to the correct voltage for data centres, factories, renewable projects and other industrial customers. Demand has already shown up in its financial statements. Second-quarter sales rose 44.7% year over year to a record $325 million, while backlog finished 96.9% above the prior-year level. Data-centre projects have driven much of that growth, indicating the company is not merely preparing for the buildout but already shipping into it.
The problem is that investors have noticed. Hammond trades at roughly 28 times annualized first-half adjusted earnings at the time of writing. That is a demanding valuation for an industrial manufacturer, particularly while it integrates AEG Power Solutions and absorbs acquisition and foreign-exchange costs. A project slowdown or weaker margins could trigger a sharp reset in the share price.
Investors do not need to bet on which AI model eventually wins. They can follow the physical bottlenecks every model shares. Capital Power offers contracted electricity and a dividend, with growth arriving later; Hammond Power offers faster growth through essential electrical equipment, but with less room for valuation error. Canada’s data centre race has moved from announcements to construction, and much of the required power infrastructure still has not been built. If today’s projects become the first wave rather than the entire boom, the companies keeping those facilities powered may have considerably more work ahead.
