From Barron's October 16:
This Company Powers AI Infrastructure. Buy the Stock.
Quanta Services is poised to benefit from increased electricity demand.
There’s nothing more essential than keeping the lights on. One way to profit from that is through Quanta Services stock.
Quanta isn’t a household name, but it keeps many Americans’ homes running. It’s an industrial services provider whose clients include utilities, oil-and-gas companies, and communications providers. With electricity demand increasing by leaps and bounds thanks to artificial intelligence, the company is busier than ever, maintaining aging power plants and modernizing their transmission lines.
“Quanta builds everything that the nation needs, and they do it well,” says T. Rowe Price’s Dante Pearson, associate portfolio manager for the firm’s U.S. Structured Active Mid-Cap Growth Strategy in the U.S. Equity Division. The urgent push to modernize infrastructure hardware across the country means there’s no shortage of projects for the company. “What is limited, and what makes Quanta unique, is the craft labor—the folks who can do these things,” Pearson says. “Quanta has these people, and that makes it an irreplaceable company in terms of scale and quality of labor.”
Keeping and retaining top workers is a key consideration for a company linked to the AI boom with plenty of work. Power plants that had been slated for closure have been pressed into longer service while new ones come online as tech giants gobble up gigawatts of capacity.
The upshot is a backlog of $36 billion and counting that “gives strong visibility into long-term growth,” says Mike Smith, head of the Allspring Global Investments Growth Equity team.
“There’s a real bottleneck in AI infrastructure—data centers are power-hungry, and the grid isn’t built for that kind of load,” he says. “They’ve earned pricing power, and the flywheel is spinning—predictable growth, expanding margins, and rising free cash flow.”...
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In very late premarket trade the stock is changing hands at a new all-time highs.
