Nucor's (NUE) Valuation and Growth Potential in the Data Center Steel Boom: Is the Stock Still Undervalued?

Here's the deal: Nucor (NUE) is riding a wave of optimism fueled by the data center construction boom, but investors need to cut through the noise and assess whether the stock's current valuation reflects its true potential. With a fair value estimate of $167.42 and a recent price hovering around $156, the question isn't just whether Nucor is undervalued-it's whether the market is pricing in the full scale of its growth story. Let's break it down.

The Fair Value Estimate: A 12–13% Upside, But Is It Realistic?

Analysts have thrown their weight behind Nucor, with a median 12-month price target of $169.15 and a range stretching from $145 to $182. The $167.42 fair value estimate aligns with these projections and is underpinned by bullish assumptions about revenue and earnings growth. By 2028, Nucor is expected to generate $37.2 billion in revenue and $3.7 billion in earnings, up from $8.52 billion and $607 million in Q3 2025. That's a 6.5% annual revenue growth rate and a $2.4 billion earnings leap from today's $1.3 billion.

But here's the catch: These projections hinge on Nucor's ability to execute its $2.4 billion CapEx plan, which includes expanding sheet steel and bar mill capacity. Delays or cost overruns could dent margins, especially as the company already faces margin compression in its steel mills segment. Q3 2025 earnings for the mills dropped to $793 million from $843 million in Q2, and management expects further declines in Q4 due to lower volumes and prices. The fair value estimate assumes smooth sailing, but steel is a cyclical business, and the data center boom isn't a magic shield against volatility.

Insider Activity: Sales, Not Buys, But Context Matters

Insiders have been net sellers in 2025, with CEO Leon Topalian offloading $16 million in shares over two years and Hollatz John J selling 5,000 shares in November at $149.86 according to insider transaction data. On the surface, this looks like a red flag. But context is key. Topalian's sales are part of a long-term personal financial strategy, and the recent dip in insider buying doesn't negate Nucor's strong balance sheet-$2.75 billion in cash and a debt-to-equity ratio of 0.34. Plus, the company's commitment to shareholder returns is intact, with a $0.55-per-share dividend and $140 million in share repurchases in Q3 alone.

Still, the lack of insider buying is a subtle signal. If the executives who've built Nucor into the largest U.S. steelmaker aren't betting big on their own stock, it's worth asking why.

Margin Expansion: A Double-Edged Sword

Nucor's operating margin of 6.96% and net margin of 4.21% are solid, but they're under pressure. The steel mills segment, which drives most of the company's earnings, saw a 6% drop in Q3 compared to Q2, and Q4 is expected to be weaker still due to seasonal demand and planned outages. Meanwhile, the steel products segment is grappling with higher costs per ton, squeezing profitability.

Yet the data center tailwind offers a lifeline. Nucor supplies 95% of the steel used in data center construction, and the sector is projected to grow from $347.6 billion in 2024 to $652 billion by 2030. For every 250,000 square feet of data center construction, Nucor ships 3,500 tons of steel-a "tsunami of earnings power," as CEO Leon Topalian put it according to market analysis. The challenge is whether Nucor can maintain pricing power as demand surges. Right now, the company's integrated domestic supply chain and Section 232 tariffs on imports give it an edge, but margin expansion will require disciplined cost management.

Sector-Specific Risks: Cyberattacks and Supply Chain Vulnerabilities

The May 2025 cyberattack, which forced a temporary shutdown of production at multiple facilities, is a sobering reminder of the risks in industrial operations. While Nucor insists the incident won't have a "material impact" on its financials according to the latest SEC filing, the breach exposed vulnerabilities in legacy systems and interconnected operations. For a company betting big on data center growth, cybersecurity isn't just a cost-it's a liability.

Geopolitical tensions and port delays also threaten supply chains. Nucor's fully integrated model helps mitigate these risks, but the May cyberattack underscores the fragility of even the most robust systems. Investors should factor in the cost of fortifying IT infrastructure and the potential for operational hiccups.

The Bottom Line: Buy, Wait, or Walk?

Nucor's $167.42 fair value estimate implies a 10–13% upside from current levels, but the path to that price isn't without potholes. The data center boom is real, and Nucor's strategic moves-like acquiring Southwest Data Products and converting facilities to serve hyperscalers-position it to capitalize. However, margin compression, insider sales, and cyber risks create headwinds.

For the aggressive investor, NUE's current valuation offers a compelling entry point, especially if you believe the market hasn't fully priced in the data center tailwind. But for the cautious, the lack of margin expansion and insider confidence might warrant a wait-and-see approach. Either way, Nucor's story is far from over-and the next few quarters will tell whether it's a steel titan or a cautionary tale.