Artificial intelligence (AI) continues to be the major focus of the markets as more people and businesses become familiar with large language models. Investors who missed the big rally in AI tech stocks over the past two years are wondering where they can get AI exposure without taking on too much risk.

Tech names in the AI space are at high multiples, and the sharp pullback that occurred recently is a reminder that sentiment can change very quickly in the tech sector. Older investors who remember the dot-com crash might be concerned that a new tech bubble is brewing. One option is to look for non-tech stocks that should benefit from the AI boom but still trade at reasonable prices and have solid outlooks driven by their core operations.

Enbridge

Enbridge (TSX:ENB) is a major player in the Canadian and U.S. natural gas transmission, distribution, and export sectors. The energy infrastructure giant moves roughly 20% of the natural gas used in the United States, and its recent US$14 billion acquisition of three American natural gas utilities makes Enbridge the largest natural gas distribution utility operator in North America. Enbridge is also a partner in the Woodfibre liquified natural gas (LNG) export facility being built in British Columbia and supplies LNG sites in the United States with the fuel.

Why is this important for AI investors?

Natural gas demand is expected to rise in the coming years as tech companies build on-site power generation facilities to provide the electricity required to operate AI data centres. The computer servers and chips need to be kept cool to avoid overheating and prevent downtime. Gas-fired power generation is expected to be the go-to power source in many cases for both the computers and cooling systems. Power grids in some areas are already expected to struggle with demand surges due to electric vehicle charging stations at homes and businesses. The added strain from AI data centres has tech companies concerned that power supplies from the grid could become unreliable. This is the reason they are turning to private power generation for data centres. Gas-fired power production can be built and scaled quickly.

Natural gas emits less carbon dioxide than coal or oil when burned. The fuel is abundant in North America and is relatively cheap. Enbridge's extensive natural gas transmission and distribution assets put the company in a good position to benefit from the anticipated jump in natural gas demand. In a recent statement, the company identified AI data centre growth as an opportunity for the business. In the U.S. alone, roughly 300 new AI data centres are planned or are under construction.

Ideally, wind and solar power would provide the electricity needed for AI data centres. In some areas, this will be feasible, at least for part of the power supply. Enbridge's purchase in 2022 of Tri-Global, the third-largest U.S. solar and wind project developer, puts Enbridge in a good position to capitalize on this opportunity, as well.

Enbridge trades near $53.50 at the time of writing compared to the 12-month low of around $43, but it is still down from the 2022 high of around $59. Recent cuts to interest rates by the Bank of Canada and anticipated cuts by the U.S. Federal Reserve will reduce borrowing expenses for Enbridge in the coming year. This should support profits and free up more cash for debt reduction or payouts to shareholders.

The company's $24 billion secured capital program is expected to drive steady 3-5% growth in distributable cash flow over the next few years. Annual dividend growth will likely be in the same range. Enbridge has increased the dividend in each of the past 29 years. Investors who buy ENB stock at the current level can get a dividend yield near 6.8%.

At this point, the potential boost to natural gas demand is probably not priced into the stock, so there could be some nice upside if natural gas demand soars.

The bottom line on AI investing

Enbridge is a good example of a non-tech stock that could benefit from the expansion of AI data centres in the coming years. If you have some cash to put to work, this stock deserves to be on your radar.