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Is Rolls-Royce Holdings (LSE: RR.) just an aero engine maker, and should we evaluate the shares solely on that basis? It’s a bit like asking if Tesla just makes cars. The answer’s no in both cases.
Both share a future in which AI is expected to play an increasingly important part. It’s just the proportion of future revenue likely to come from new AI sources that differs. And the importance to Rolls-Royce might not be quite as obvious.
So I asked my friendly chatbot what the AI future might hold…
Already playing a part
These large language models (LLMs) can, and often do, get things wrong. So I always ask for sources to back up any claims, and I make sure I check them. And we should never base investing decisions on what AI says.
It can be a useful tool for digging out the information we need. But important decisions over where to invest our cash should be based on our own human evaluation.
With that said, the sources ChatGPT offered me were pretty good ones — including Rolls-Royce itself. And it immediately threw up one thing I’d overlooked: Power Systems revenue coming from data centres grew by an impressive 35% in 2025 — driving a 30% rise in Power Systems revenue overall.
Just the start
And that’s 2025, a year in which the power-hungry AI industry was still just getting off the ground. What might we see in the coming years? Well, the big AI hyperscalers are talking of investing astronomical sums.
I can’t guess what share of that might come the way of Rolls-Royce. But management’s already including data centres in its forecasts. And it expects them to help increase power generation revenue by around 20% a year in the medium term.
It might not take many years for that kind of growth to compound up to a nice fat income stream. And there’s one thing I do know for sure — I’ll be diving into 2026 results as soon as I can get my eyes on them.
New kinds of power
Suppose one of the Magnificent Seven tech companies wants power for a huge new data centre it’s building miles away from the nearest population centre? It could prove difficult, and take ages to get wired up to the existing power grid.
And that’s where the new generation of small modular nuclear power stations come in. They’re designed to be installed and connected up simply and quickly. And Rolls-Royce is one of the companies leading the way.
So should we buy into AI?
There’s one key question about Rolls-Royce shares in my mind however. Quantifying all of this is far from easy. We’ve no idea how much Rolls might earn from AI-related activity. And how much of those future prospects is already built into the share price?
Still, many investors have a high tolerance for risk. And I do think the AI potential here should make Rolls-Royce a stock to consider.
It’s too risky for my strategy geared more to safety though. And I have my eyes on some attractive alternatives…
Should you invest £5,000 in Rolls-Royce Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?
Alan Oscroft does not hold any positions in the companies mentioned.
This story originally appeared on Motley Fool
