Bank of America says the most durable advantages in the AI buildout are not where most investors are looking.
In a new CNBC interview, Andrew Obin, Managing Director at Bank of America Securities Equity Research, says markets are overly focused on headline chip cycles while overlooking the infrastructure partners quietly embedding themselves into data center operations.
“I would start is that we’re in the midst of a massive technology change, driven by Nvidia as Jensen is building a moat versus the competition. Our thesis is that big players in the industry, both on the HVAC side and electrical side, are partnering up with the data centers to drive this technological change.”
According to the Bank of America executive, the real moat is forming around execution at scale, not just innovation speed, as the industry enters a multi-year transition following every release of next-generation chips. Obin says that each transition forces big changes across the physical infrastructure that supports AI.
“And the moat is the pace of the technological change. So we think there will be a lot of news over the next couple of years as we’re transitioning from the GBX rack to the Kyber rack. And as we’re going from Blackwell to Rubin, and then we’re gonna go to Feynman chip. And each one of these steps requires a very, very massive change in technology that supports the data center infrastructure.”
The result, he warns, will be sustained volatility and distraction that could drive investors to chase short-term narratives instead of focusing on who data center operators trust.
“I just think there’s going to be a lot of noise. And I think the answer is stick with the big players. Because what the data centers want: they want to partner up with people who can design, install, commission, and service the equipment. That’s the moat.”
Obin says the market is underappreciating the structural advantage.
“And I think the market is missing it.”
Some of the names Obin mentions that would benefit from partnering with data centers include Johnson Controls (JCI) and Trane Technologies (TT).
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