Prysmian runs, analysts positive on the wave of AI and data centres

(Il Sole 24 Ore Radiocor) - Prysmian is in the spotlight at Piazza Affari, gaining around four points on a weak FTSE MIB. The stock - which is trading at an all-time high in terms of capitalisation at around EUR 42bn - also benefited from the change in Deutsche Bank's rating, which raised its recommendation to 'buy' from 'hold' and its target price to EUR 167 from EUR 100, confirming the group's favourable momentum in the midst of demand related to power grids, data centres and artificial intelligence.

The broker points out that 'as the race to build computing capacity for AI intensifies, Prysmian finds itself at the intersection of three major bottlenecks emerging along the value chain: network infrastructure, medium-voltage cables to data centres, and fibre for the interconnection between servers and data centres'. It is precisely fibre that has become increasingly relevant because, the analysts write, 'the shift towards inference workloads has led to increased intra- and inter-data centre bandwidth and latency requirements, in turn fuelling a sharp increase in fibre prices'.

According to Deutsche Bank, Prysmian is well positioned because it "is one of the few fibre producers with a domestic presence in the US" and is "on the verge of announcing significant long-term agreements with hyperscalers to support capacity expansion in fibre". Hence the upgrade: 'After a brief pause in earnings momentum, with the trajectory now firmly re-accelerating, we raise the rating to buy from hold'.

Also contributing to the sentiment was the M&A theme, which supported the stock throughout the week. In fact, CEO Massimo Battaini stated on Tuesday that 'the US remains the country we are focusing on most: it is a well-established and disciplined market, with a higher level of profitability. M&A is natural in the US, but we do not neglect other opportunities in Europe or Latin America,' Battaini concluded.