Data Center Builder Boom
Saihajpreet Singh@saihaj
· 1
−5.2%
since Sep 30
The idea
I think the real money in the data center buildout over the next two to three years goes to the builders, not the utilities: the electrical crews, substation contractors, and mechanical shops with years-long backlogs. So the portfolio leans heaviest into grid and transmission builders and data center electrical and mechanical contractors, with smaller positions in site work, connectivity, and power plant EPC names that haven't fully caught up yet. I'm holding 10% in cash to add on the sharp swings these stocks tend to have around earnings.
What it owns
- New data centers require high-voltage transmission lines and substations to operate, creating sustained demand for the specialized crews that build this critical infrastructure. · Quanta ServicesIt builds the transmission lines and substations that every new data center requires to operate at scale., MasTecIt builds power delivery lines that bring electricity from generation sources to new data center locations., MYR GroupIt specializes in building substations, the electrical facilities every data center campus needs to operate., Primoris ServicesIt builds utility-scale power and grid infrastructure projects that support growing data center electricity demands., Centuri HoldingsIt performs grid construction and utility work for data center projects and operates with smaller crew bases than larger competitors.32%
- Data centers need internal electrical wiring, power distribution systems, and cooling equipment installed by contractors with scarce specialized skills. · Comfort Systems USAIt installs the mechanical and cooling systems that prevent data center facilities from overheating, work requiring scarce specialized labor., EMCOR GroupIt performs large-scale electrical contracting for data centers with a backlog extending several years into the future., IES HoldingsIt is a smaller electrical contractor with a rapidly growing data center business that benefits directly from the construction boom., Everus Construction GroupIt performs electrical and mechanical contracting for data centers and has recently separated from its parent company., Limbach HoldingsIt installs mechanical systems and cooling equipment that every data center facility requires to function.30%
- Data center campuses require site preparation, fiber connections, and fire safety systems before construction begins and after facilities open. · Sterling InfrastructureIt performs site grading, foundations, and campus preparation work for data center developments., Dycom IndustriesIt builds the fiber optic lines that connect data centers to each other and to external networks., APi GroupIt installs fire protection and safety systems that data center facilities must have before operating.14%
- New natural gas power plants are being built specifically to supply electricity to data center clusters, with engineering firms designing and constructing these facilities. · ArganIt constructs natural gas power plants built to supply electricity directly to nearby data center campuses., Jacobs SolutionsIt provides the design and engineering services that precede construction on data center and power projects., FluorIt designs, procures, and builds complete power plants and industrial projects supporting data center infrastructure needs.14%
- Power producers that sell electricity directly to data centers benefit from sustained demand as the sector expands. · It supplies electricity to data centers and other industrial users, benefiting from rising power consumption in computing., It produces power for data center operators under long-term contracts, securing revenue as the sector scales., It generates and sells electricity directly to data centers, capturing demand from the industry's growth in computing infrastructure., It generates and markets electricity to data centers and other customers, capturing growth in industrial power demand.12%