An AI server can house the most advanced chips ever built, but without enough electricity reaching the building, it is little more than an expensive metal box. That gap is becoming one of the defining bottlenecks of the artificial-intelligence era — and it is powering a remarkable rally in a century-old Canadian industrial stock.
The International Energy Agency expects global data-center electricity consumption to climb from about 485 terawatt-hours (TWh) in 2025 to 950 TWh by 2030, with AI-focused facilities potentially tripling their power use over the same period. The constraints already extend well beyond chips: the IEA specifically flags tightening supplies of gas turbines and transformers — the equipment that steps up voltage and safely distributes power to server racks.
That is where Hammond Power Solutions Inc. (TSX: HPS.A) sits. The Guelph, Ontario-based manufacturer traces its roots to 1917 and makes dry-type transformers, power-quality equipment and custom magnetics used across data centers, factories, utilities, oil and gas, mining, commercial construction and wind generation.
Demand has arrived in a hurry. Second-quarter sales surged 44.7% year over year to a record $324.8 million, led by a 73% jump in U.S. and Mexico shipments. Adjusted earnings per share rose 60.5% to $2.76, and gross margin expanded to 31.5% from 30.7% a year earlier.
The order book tells the bigger story. Backlog was nearly 97% higher than a year earlier, driven largely by large data-center projects. Data-center revenue now accounts for more than 30% of the company’s total sales.
Investors have taken note. Over the three years ended June 30, HPS.A shares rallied 625%, turning a $1,000 investment into $7,250. On Sept. 9, the Toronto Stock Exchange named the company No. 13 on its 2026 TSX30 list of top three-year growth performers — the third consecutive year it has made the ranking. The stock is up 75% year to date and 128% over the past 12 months, with an annualized dividend yield of roughly 0.4%.
Now Hammond is racing to keep up. On Sept. 22, it announced a new manufacturing plant in Fort Worth, Texas, with production slated to begin in stages in late 2027. The first phase will require roughly $50 million of investment and is expected to add about $250 million in annual manufacturing capacity, with room to expand to about $400 million as demand dictates.
Hammond also closed a $365 million acquisition of AEG Power Solutions in June, broadening its footprint across Europe and Asia and expanding its power-electronics portfolio.
Still, the rally has paused. The shares have pulled back about 22% from their all-time highs and trade at a price-to-earnings ratio of 29 — a premium to legacy industrial peers. Canadian sales fell 11.1% in the first half of 2026 as the domestic market softened and price competition intensified.
Investors are weighing three pressure points. Raw-material costs such as copper and electrical steel can compress margins if price adjustments lag inflation. Any pause in hyperscaler AI capital spending could cool near-term order momentum. And the cross-market integration of AEG Power Solutions will test management’s operational execution.
