NVDA - Kinder Morgan Should Be An Indirect Beneficiary From AI

2024-06-20 13:00:00 ET

Summary

• Kinder Morgan shares have appreciated by 18.49% over the past year and are up 11.9% YTD, retesting $20 as predicted.
• KMI is well-positioned to benefit from the AI revolution, with a growing demand for energy infrastructure due to increased data center usage.
• KMI is committed to growth projects, increasing LNG export capacity, and returning capital to shareholders through dividends and share buybacks.

Kinder Morgan ( KMI ) is having a good year as shares briefly broke through $20 and closed at $19.74 on 6/18/24. Shares have appreciated by 18.49% over the past year and are up 11.9% YTD. KMI is back to trading in its pre-pandemic range and is retesting $20, as I had previously predicted. Despite coming off its lows and slowly grinding higher, I still believe there is a long-term opportunity in the energy infrastructure industry, especially in KMI shares. The barriers to entry are immense, and KMI only has to worry about existing competition rather than focus on how new participants may disrupt its operational dominance. KMI has built an energy infrastructure footprint that is as close to irreplaceable as you can get, with over 66,000 miles of pipelines moving 40% of the natural gas produced in the United States, and 9,500 miles of pipelines transporting crude and refined products. I don't believe the genie can ever go back in the bottle as computing has continued to expand for decades. The AI revolution is just getting started, and with the amount of capital being allocated to CapEx from big tech, reversing course on AI is simply not an option. The amount of power needed for data centers and the future of computing is likely to expand, which should drive the demand for energy higher. Owning shares of KMI is similar to being a partial owner in toll booths, as KMI is collecting fees for all of the fuel that moves through its system. I think KMI will continue to increase, and shareholders will continue to be rewarded through larger dividends and capital appreciation....

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