From Barron's, October 8:
Shares of Quanta Services have soared by nearly two-thirds in the year since Barron’s first recommended them. Their run still doesn’t look done.
Quanta is an industrial services provider, meaning its clients are utilities and oil-and-gas companies that are seeing increased demand from the artificial intelligence buildout and the massive power that requires.
That doesn’t look like it’s going to stop any time soon, so Quanta will stay busy: Its backlog increased by nearly half last year, to more than $53 billion and counting, and the company expects that data center and tech players will account for some 18% of 2026 revenue, up from 10% a year ago.
“Quanta’s stock hasn’t been driven by multiple expansion; it’s been driven by an explosion in earnings power,” says Mike Smith, senior portfolio manager at Allspring Global Investments. “The company sits at the right side of change, at the intersection of AI infrastructure, grid modernization, and electrification, but its real advantage is labor. As the industry’s bottleneck shifts from megawatts to manpower, Quanta’s ability to recruit and retain skilled craft workers is becoming an increasingly valuable competitive moat.”
In fact, Quanta’s earnings per share are expected to jump more than 55% this year, according to consensus estimates, to a record $16.74, before notching another nearly 18% gain in 2027. That kind of growth helps explain its valuation, as the stock trades around 35 times next year’s earnings–although that’s actually below its five-year average and down from a peak of more than 50 times earlier this year.
“Investors are paying less for each dollar of earnings despite a dramatic increase in the company’s earnings power,” says Smith.
It’s not just AI however. Much of the U.S. grid needs to be modernized and upgraded, and increasing demand for power overall across the country has kept older power plants in use long past when many expected. Maintenance is necessary to keep electricity flowing, and few companies have the skilled workforce and track record of reliability....
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It's going on three years since "The Infrastructure Theme Is For Real (PWR)".
As noted exiting a January 2025 post:
Quanta and GE Vernova will survive and thrive. Even without AI. The U.S. and the world need to string more powerlines and need more generating capacity that will come on line faster than nukes or a baby nukes.
Over one year PWR is up 61.55% vs 15.92% for the S&P500 for three years it leads +300.45% to +80.07%.
For GEV the numbers are +57.81% vs the +15.92% and +768.39% vs the +80.07%.
The Barron's article is by Teresa Rivas, Al Root covers GE Vernova. The both have a feel for the respective companies.
