Artificial Intelligence (AI) Infrastructure Spending Is Rising. This Stock Could Benefit.

The United States and China might be leading the pack in terms of artificial intelligence (AI) development, but they are far from the only countries working on the technology or expanding their data center capacity.

Europe is another hotspot for data center construction, and those data centers will face the same power problems that they do in the United States. The International Energy Agency (IEA) projects that the amount of global electricity consumed by data centers will double by 2030.

Power infrastructure is one of the most overlooked parts of the AI equation. And, like America, Europe will also need a whole lot more electricity to run its data centers. Fortunately, Rolls-Royce (OTC: RYCEY) can build a nuclear power plant in a factory.

Image source: Getty Images.

This Rolls-Royce isn't really focused on luxury vehicles

I'm willing to bet you've heard the name Rolls-Royce before, in the context of super-luxury cars with an iconic hood ornament dubbed the "Spirit of Ecstasy." But those vehicles are produced by BMW, which bought the automotive side of Rolls-Royce's business in 1998.

Rolls-Royce predates the cars bearing its name and has been making engines for the Royal Air Force since 1914. Today, it still produces some of the best aircraft engines in the world.

However, the opportunity for Rolls-Royce in the AI infrastructure space involves its small modular reactors (SMR) business segment. These tiny power plants can be built mostly in factories. About 90% of them are pre-built and then shipped in pieces to their final location, where construction is completed.

Once completed, the SMR works like a normal nuclear reactor, just on a one-tenth scale.

One Rolls-Royce SMR can last for up to 60 years and generate up to 470 megawatts of power, which is the equivalent of 150 onshore wind turbines.

Rolls-Royce has already had some takers, too. CEZ Group, a major power company in the Czech Republic, has partnered with Rolls-Royce to deploy SMRs in the country and taken a 20% stake in Rolls-Royce shares.

German industrial giant Siemens (ETR: SIE) has also partnered with Rolls-Royce to help develop and install turbine systems for the SMR, and has pledged its help in deploying the reactors globally.

The business segment is off to a good start

Rolls-Royce's most recent data is from the first half of 2025, but according to that data, the company was off to a good start. Total revenue for the first half of 2025 was up 13% over the first half of 2024. Gross profit and operating profit grew 33% and 50% respectively over the same timeframe, and the company's basic earnings per share (EPS) grew 76%.

But the even more interesting story is where that revenue growth came from. While the bread and butter of Rolls-Royce's business has historically been civil and military aerospace, its biggest increase in revenue came from its power systems business, which produces the SMR.

Revenue for that segment grew 23%, and the power generation subset of that sector's revenue grew 26%. That tells me that Rolls-Royce's future growth will be driven by its power systems, namely the SMR, while its aerospace business will provide some nice stability as the power systems sector grows.

Nuclear power will play a role in the future of AI, and thanks to Rolls-Royce, that future ought to arrive in style. This one is worth a look both as an AI infrastructure play and for some geographical diversification in your portfolio.

James Hires has no position in any of the stocks mentioned. The Motley Fool recommends Bayerische Motoren Werke Aktiengesellschaft and Rolls-Royce Plc. The Motley Fool has a disclosure policy.