Why Sterling Infrastructure (STRL) Is Positioned to Capitalize on the AI-Driven Data Center Boom in 2026

The AI revolution is reshaping global infrastructure demand, and companies that provide the tools to build and sustain this new era are emerging as critical players. Sterling Infrastructure (STRL) is one such entity, operating in the "picks and shovels" role of the AI-driven data center boom. Just as gold rush-era suppliers profited from the labor of miners, firms like STRL are poised to benefit from the surging need for mission-critical infrastructure to power AI's next phase.

E-Infrastructure as the New "Picks and Shovels"

Sterling's E-Infrastructure Solutions segment is the backbone of its growth strategy. This division specializes in large-scale site development for hyperscale data centers, e-commerce hubs, and other high-demand projects. As of Q1 2025, data center projects accounted for over 65% of the segment's $1.2 billion backlog, with the entire E-Infrastructure segment representing 57% of the company's $2.1 billion total backlog. This focus on high-margin, complex projects has allowed STRL to deliver consistent results: in Q3 2025, the segment achieved 58% revenue growth and 57% adjusted operating income growth, while gross profit margins hit a record 24.7%.

The analogy to "picks and shovels" is apt. Unlike hyperscalers like Amazon or Microsoft, which compete for AI market share, STRL enables their operations by providing the physical and electrical infrastructure needed to deploy AI at scale. This includes site selection, power distribution, and grid integration-services that are becoming increasingly indispensable as AI's energy demands soar.

AI-Driven Data Center Demand: A $1 Trillion Opportunity

The case for STRL is underpinned by the explosive growth of AI-driven data center power needs. Goldman Sachs Research estimates that global data center power demand will rise by 50% by 2027 and 165% by 2030, with AI accounting for 27% of this demand by 2027 (up from 14% in 2023). Hyperscalers are already investing aggressively: Alphabet, Amazon, Microsoft, and Meta alone spent $200 billion on data center infrastructure in 2024, with plans to increase this by over 40% in 2025.

This spending isn't limited to servers or software. As Deloitte notes, "79% of data center developers expect AI to increase power demand through 2035," creating grid stress and interconnection bottlenecks. The solution? Companies like STRL that can design and execute high-density power solutions. The International Energy Agency (IEA) highlights that AI is accelerating the adoption of high-performance servers, which require robust electrical systems and cooling infrastructure-areas where STRL's recent acquisition of CEC Facilities Group has strengthened its capabilities.

Sterling's ability to maintain profitability in a capital-intensive industry is a key differentiator. Its E-Infrastructure segment's 24.7% gross margin in Q3 2025 outpaces the industry average, reflecting its expertise in managing complex, high-margin projects. This is further bolstered by its onshoring tailwinds: U.S. data center development is being driven by domestic demand for AI and cloud computing, with grid upgrades and supply chain resilience becoming critical pain points.

Moreover, STRL's acquisition of CEC Facilities Group in 2025 has expanded its electrical services portfolio, enabling it to offer end-to-end solutions for semiconductor and data center clients. This vertical integration reduces reliance on third-party contractors and enhances its value proposition in an industry where time-to-market is paramount.

Challenges and the Path Forward

While the outlook is bullish, risks remain. Grid constraints, supply chain delays, and rising construction costs could slow data center expansion. However, these challenges also create opportunities for firms like STRL that specialize in navigating regulatory hurdles and optimizing project timelines. Goldman Sachs estimates that $720 billion in grid infrastructure spending will be needed by 2030 to support data centers, a market STRL is well-positioned to serve.

Conclusion: A Compelling "Picks and Shovels" Play

Sterling Infrastructure is not just a beneficiary of the AI boom-it is a critical enabler. By combining its expertise in mission-critical infrastructure with a strategic focus on high-growth sectors like AI and semiconductors, STRL is capturing a disproportionate share of the value chain. As data centers become the new "power plants" of the digital age, companies that build and maintain them will see outsized returns. For investors seeking exposure to the AI revolution without the volatility of tech stocks, STRL offers a compelling, infrastructure-focused alternative.