Is Nucor (NUE) a Stealth AI Stock? Contrarian Infrastructure Investing in the AI Era

In the race to build the infrastructure of the AI revolution, investors often fixate on the glitz of silicon and software. Yet, the true bedrock of this transformation lies in the unglamorous but indispensable materials that power it: steel. Nucor Corporation (NUE), North America's largest steelmaker, is quietly emerging as a “stealth AI stock” through its pivotal role in supplying the physical infrastructure required for data centers, grid modernization, and the broader industrial renaissance. With Warren Buffett's Berkshire Hathaway investing $857 million in Nucor in 2025, the company is positioned as a contrarian play on the AI-driven economy—one that prioritizes durable, foundational assets over fleeting tech hype.

The Hidden Link Between Steel and AI Infrastructure

Artificial intelligence is not just a software phenomenon; it is a physical revolution. Hyperscalers like Amazon, Microsoft, and Google are racing to build data centers capable of consuming 2,000 MW of power each—equivalent to the energy needs of a small city. These facilities require vast quantities of steel for structural frameworks, cooling systems, and power distribution networks. Nucor's electric arc furnace (EAF) technology, which recycles scrap steel into low-embodied carbon products, is uniquely positioned to meet this demand.

Nucor's recent $200 million investment in a new utility structures facility in Brigham City, Utah, underscores its alignment with AI infrastructure trends. This facility, alongside two others in Alabama and Indiana, will produce galvanized steel poles and structures for data centers, EV charging stations, and grid upgrades. The Utah plant's rail-connected logistics and automation ensure cost efficiency and rapid scalability—critical advantages in a market where lead times for grid connections can stretch seven years.

Buffett's Bet: A Contrarian Play on Industrial Resilience

Warren Buffett's $857 million stake in Nucor is more than a vote of confidence in steel—it's a strategic bet on the reshoring of American manufacturing and the infrastructure needs of the AI era. Unlike speculative tech stocks, Nucor offers a durable business model with a 52-year streak of dividend growth and a $3 billion capital expenditure plan for 2025. Buffett's investment aligns with his long-standing preference for “American industrial strength,” particularly in sectors critical to national security and economic resilience.

The steel industry's cyclical nature often deters investors, but Nucor's EAF technology provides a competitive moat. By using recycled scrap, Nucor avoids the volatile costs of raw materials like iron ore and coal. This model not only reduces carbon emissions but also insulates the company from supply chain shocks—a critical factor as the U.S. government pushes for self-reliance in critical industries.

Sustainability as a Strategic Advantage

Nucor's EAF steelmaking process is a cornerstone of its appeal in the AI era. With data centers under increasing pressure to meet clean energy goals, Nucor's low-carbon steel is a key enabler of sustainable infrastructure. The company's circular economy approach—recycling decommissioned oil rigs, retired infrastructure, and end-of-life vehicles—aligns with global decarbonization targets and regulatory tailwinds.

Moreover, Nucor's recent cybersecurity incident in May 2025, which temporarily halted production, highlights the risks of industrial digitization. However, the company's swift response and emphasis on strengthening IT systems demonstrate its adaptability. For long-term investors, this incident underscores the importance of resilience in critical infrastructure providers—a trait Nucor has historically exemplified.

The Case for Nucor: A High-Conviction Holding

While Nucor may lack the glamour of AI chipmakers or cloud platforms, its role as a foundational enabler of the AI revolution is undeniable. The company's strategic expansion into utility structures, combined with its EAF-driven sustainability, positions it to benefit from:
1. Data center proliferation: 31.9 million square feet of new U.S. data center space projected for 2025.
2. Grid modernization: $73 billion in U.S. infrastructure spending allocated to grid upgrades and EV infrastructure.
3. Reshoring momentum: U.S. steel tariffs and domestic manufacturing incentives favoring Nucor's EAF model.

At a forward P/E ratio of 17.5, Nucor trades at a discount to its historical average, reflecting market skepticism about steel's cyclical nature. Yet, for investors with a multi-year horizon, this represents an opportunity to capitalize on the industrial backbone of the AI era. Buffett's investment serves as a masterclass in contrarian thinking: betting on the unsexy but essential components of progress.

Conclusion: Building the Future, One Beam at a Time

Nucor's journey from a steelmaker to a stealth AI stock exemplifies the power of infrastructure investing. As the AI revolution accelerates, the demand for sustainable, domestically produced steel will only grow. For investors seeking to align with this trend, Nucor offers a compelling combination of durability, innovation, and strategic positioning. In a world fixated on the next big tech idea, the real winners may be those who build the platforms that make those ideas possible.

Investment Advice: Nucor is a high-conviction holding for long-term investors. Its alignment with AI infrastructure, sustainability tailwinds, and Buffett's endorsement justify a core position in a diversified portfolio. Monitor macroeconomic risks, such as interest rate volatility, but remain confident in Nucor's ability to navigate cycles through its EAF-driven efficiency and strategic expansion.