In this article, we will list the 5 Best Water Infrastructure Stocks to Buy as AI Data Centers Strain Resources. Please visit 10 Best Water Infrastructure Stocks to Buy as AI Data Centers Strain Resources if you’d like to see an extended list.
To compile our list, we screened for companies with direct exposure to water treatment, reuse, pumping, flow control, metering, and related infrastructure. We then prioritized stocks with recent business updates, data center exposure, or infrastructure demand tied to cooling. We then ranked stocks based on the number of hedge funds holding stakes in them as of Q1 2026.
5. Xylem Inc. (NYSE:XYL)
Number of Hedge Fund Holders: 46
Xylem Inc. (NYSE:XYL) is one of the best water infrastructure stocks to buy as AI data centers strain resources. On June 8, 2026, the company expanded its long-term partnership with Dow to design, build, and operate advanced water systems at Dow’s large-scale industrial complex in Fort Saskatchewan, Alberta. The project will support Dow’s Path2Zero operations and is expected to be operational by August 2028.
The agreement gives Xylem a fresh example of the kind of integrated water-management work that becomes more important as industrial and digital infrastructure strain local water supplies. Xylem will deliver engineering, system design, and long-term operation for a full water-cycle system that treats raw water, converts cooling and industrial process water into high-quality reusable supply, and optimizes system performance over time. That directly supports the broader AI infrastructure theme because water reuse, treatment, and real-time system management are becoming central to avoiding competition between industrial growth and community water needs.
Xylem Inc. (NYSE:XYL) provides water technology, treatment, pumping, analytics, metering, wastewater, reuse, and digital infrastructure solutions for utilities, commercial customers, industrial facilities, and communities worldwide.
4. Core & Main, Inc. (NYSE:CNM)
Number of Hedge Fund Holders: 55
Core & Main, Inc. (NYSE:CNM) is one of the best water infrastructure stocks to buy as AI data centers strain resources. On June 10, 2026, the company reported fiscal first-quarter net sales of $1.91 billion and reaffirmed its full-year fiscal 2026 net sales outlook of $7.8 billion to $7.9 billion. Management said municipal demand remained healthy, supported by repair-and-replace activity and infrastructure investment, while treatment plant solutions grew at a double-digit rate and smart utility products posted high-single-digit growth.
The update is relevant to the AI data center theme because Core & Main sits in the distribution layer of water infrastructure. During the same earnings call, management said the company continued to see strong sales volumes in data center construction. Those projects require water, wastewater, storm drainage, meter, fire protection, pipe, valve, fitting, and treatment plant products before campuses can scale. Core & Main’s role as a specialty distributor also gives it exposure to fragmented local infrastructure work, where utilities and contractors need supply-chain depth, branch coverage, and product expertise to support both aging systems and new load from large industrial projects.
Core & Main, Inc. (NYSE:CNM) distributes water, wastewater, storm drainage, fire protection, meter, treatment plant, and related infrastructure products to municipalities, private water companies, and contractors across municipal, non-residential, and residential markets.
3. Veralto Corporation (NYSE:VLTO)
Number of Hedge Fund Holders: 57
Veralto Corporation (NYSE:VLTO) is one of the best water infrastructure stocks to buy as AI data centers strain resources. On May 18, 2026, ChemTreat, a Veralto operating company, joined Dow’s newly launched Coolant Care Network as a strategic national service provider for AI data center cooling and as Dow’s only preferred service provider in Virginia.
The collaboration gives Veralto a direct role in the liquid-cooling shift taking place inside high-density AI data centers. Dow’s Coolant Care Network coordinates fluid supply, testing, data analysis, and field support, while ChemTreat provides sampling, mitigation, fluid health optimization, specialized chemistries, and remote monitoring. ChemTreat also added Dow’s DOWFROST LC and DOWFROST HD heat transfer fluids to its portfolio for direct-to-chip cooling loops and facility loops. For investors, the angle is that Veralto is not just exposed to water quality in municipal systems; through ChemTreat, it is also positioned inside the operating reliability layer of AI data center cooling, where water chemistry, corrosion control, fluid performance, and uptime become more important as workloads become denser.
Veralto Corporation (NYSE:VLTO) provides water quality and product quality solutions through brands including ChemTreat, Hach, Trojan Technologies, McCrometer, OTT HydroMet, Aquatic Informatics, Esko, Linx, Videojet, and X-Rite.
2. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Holders: 60
Ecolab Inc. (NYSE:ECL) is one of the best water infrastructure stocks to buy as AI data centers strain resources. On June 1, 2026, CoolIT Systems announced that it had developed a 15kW coldplate design for single-phase direct liquid cooling, delivering nearly four times the capacity of its previously demonstrated coldplate and extending its roadmap for future ultra-high-density AI infrastructure.
The update is relevant to Ecolab because the company agreed on March 20, 2026, to acquire CoolIT Systems for approximately $4.75 billion in cash. CoolIT’s 15kW coldplate was validated using a standard water-glycol coolant at 1.2 liters per minute per kilowatt, with system-level performance suitable for 45°C warm-water cooling environments. That ties directly into the water-efficiency side of AI infrastructure, since higher-density GPUs and accelerators are pushing data centers toward liquid cooling systems that move heat through engineered fluid loops instead of relying only on traditional air cooling.
Ecolab Inc. (NYSE:ECL) provides water, hygiene, infection prevention, digital monitoring, water treatment, chemistry, and operational efficiency solutions for customers across industrial, institutional, healthcare, life sciences, microelectronics, food, hospitality, data center, and power markets.
1. Ferguson Enterprises Inc. (NYSE:FERG)
Number of Hedge Fund Holders: 85
Ferguson Enterprises Inc. (NYSE:FERG) is one of the best water infrastructure stocks to buy as AI data centers strain resources. On May 5, 2026, Ferguson reported first-quarter sales of $7.5 billion, up 3.6% year over year, while U.S. non-residential revenue rose 8%. Management said large capital project activity remained strong, with growth in shipments, open orders, and bidding activity.
The data center angle is unusually direct for a distributor. During the same earnings call, CFO Bill Brundage said data centers accounted for a little over half of Ferguson’s large capital project revenue. He also said large capital projects showed up principally in commercial mechanical, which grew 21%, and in part of Waterworks, which grew 14%.
This is important because large AI data center campuses require coordinated waterworks, mechanical, HVAC, plumbing, PVF, valve, flow-control, wastewater, and fire-protection supply before they can operate at scale. Ferguson also completed two Waterworks acquisitions during the quarter: Technology Sales Associates and Chesapeake Environmental Equipment.
Ferguson Enterprises Inc. (NYSE:FERG) is a North American distributor of water, air, plumbing, HVAC, PVF, waterworks, wastewater, and related infrastructure products.
While we acknowledge the potential of FERG to grow, our conviction lies in the belief that some other AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than FERG and that has 100x upside potential, check out our report about the cheapest AI stock.
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