Afraid of an AI Correction This Year? This Industrial Stock Has AI Upside With Value Pricing

There's no question that artificial intelligence (AI) is one of the most transformative technologies of modern times. However, the lofty valuations some of the top AI stocks are trading for are causing some investors to approach with caution, or to avoid AI investing altogether.

If you're looking for AI exposure at a reasonable price, it could be a smart idea to take a closer look at Prologis (NYSE: PLD). Here's why.

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Prologis in a nutshell

If you're not familiar with the company, Prologis is a real estate investment trust, or REIT (pronounced "reet") that specializes in industrial properties -- particularly large-scale distribution centers. It owns about 6,000 properties across four continents, totaling 1.3 billion square feet of rentable space. In fact, Prologis is the largest REIT of any kind in the world, and it is estimated that 3% of global GDP flows through its distribution centers each year.

As you might expect, Amazon (NASDAQ: AMZN) is the largest Prologis tenant, followed by The Home Depot (NYSE: HD) and FedEx (NYSE: FDX). In all, 6,500 companies rely on Prologis properties for their logistics needs.

AI potential in a logistics REIT?

So far, you might be wondering why I'm talking about Prologis in the context of AI potential. Well, here's why.

In addition to its distribution centers, Prologis has recently started to build data centers, mainly to lease or sell to hyperscalers and other users. In a nutshell, data centers are purpose-built facilities that house the infrastructure that enables the AI revolution. Prologis is investing somewhat aggressively, forming a new $25 billion data center development arm, and recently expanding its data center power pipeline to 5.7GW of capacity.

According to Grand View Research, the global data center market is expected to grow from $384 billion in 2025 to more than $900 billion by 2033. And Prologis, with its financial flexibility and scale, is well-positioned to capitalize on this opportunity. The company has a rock-solid balance sheet and A-rated credit that gets it favorable borrowing costs.

A reasonable price

At the current price, Prologis trades for about 21 times funds from operations (FFO), the best metric for REIT "earnings." With 6% same-store net operating income growth, 27% cash rent growth on new and renewal leases, a 3.1% dividend yield, and a massive data center opportunity still in its early innings, Prologis is an under-the-radar AI stock worth a closer look right now.

Matt Frankel, CFP has positions in Amazon, FedEx, and Prologis. The Motley Fool has positions in and recommends Amazon, Home Depot, and Prologis. The Motley Fool recommends FedEx. The Motley Fool has a disclosure policy.