Alstom's North American Rail Renaissance: A Must-Own Equity for Infrastructure Investors

Alstom, the French rail giant, is emerging as a pivotal player in North America's rail modernization push, with its $2.3 billion contract to supply 316 new commuter railcars for New York's Metropolitan Transportation Authority (MTA) serving as a linchpin for sustained growth. The deal, finalized in June 2025, underscores the company's strategic alignment with U.S. infrastructure policies, its commitment to reshoring manufacturing, and its ability to capitalize on a booming market for rail modernization. For investors, Alstom now represents a rare equity play on a sector poised to deliver years of steady returns.

The MTA Contract: A Catalyst for Growth and Job Creation

The MTA's $2.3 billion order for 316 M-9A railcars—160 for the Long Island Rail Road (LIRR) and 156 for Metro-North—marks a critical milestone for Alstom. The contract, part of the MTA's $10.9 billion fleet modernization plan, will replace aging M-3 models and deliver cars featuring modern amenities like USB ports, larger windows, and improved accessibility. Crucially, production will occur entirely within New York state, primarily at Alstom's newly expanded Hornell facility, a $75 million plant that reshored car body shell manufacturing from Brazil.

This project alone will create 258 new union jobs in upstate New York, while retaining 390 existing roles. Combined with the plant's ongoing work on Chicago Metra commuter cars and Amtrak's Avelia Liberty high-speed trains, the facility is becoming a linchpin for regional economic revitalization. For investors, this isn't just about jobs—it's about locking in long-term manufacturing demand. The MTA contract includes an option to purchase an additional 242 railcars, signaling potential upside for Alstom's order backlog.

A Robust Order Backlog and Financial Momentum

Alstom's North American order book is swelling. In fiscal 2024/25, the Americas region saw order intake jump 68% year-over-year to €3.4 billion, driven by the MTA deal and a $479 million AirTrain maintenance contract in New York. The company's Services division, which now accounts for nearly 20% of total sales, benefits from recurring revenue streams like maintenance agreements, providing steady cash flow. Meanwhile, its Systems division—specializing in signaling and digital solutions—is booming, with sales up 26% organically in 2024/25.

Alstom's financial outlook reinforces its investment case. The company aims for 3-5% organic sales growth in fiscal 2025/26, supported by a book-to-bill ratio above 1.0. While Free Cash Flow (FCF) is projected between €200–€400 million, management's focus on cost discipline—reducing overheads to 5.7% of sales—hints at improving profitability. For a sector often plagued by project delays, Alstom's execution track record in North America is a rare bright spot.

Riding the Wave of U.S. Infrastructure Spending

Alstom's success aligns with two key trends: the Biden administration's push for domestic manufacturing under the CHIPS and Inflation Reduction Acts, and the MTA's $68.4 billion capital plan. The U.S. government's restrictions on foreign-owned manufacturers—such as China's CRRC—have narrowed competition, favoring Alstom, which acquired Bombardier in 2020. This consolidation positions Alstom as the go-to partner for states like New York and Illinois, which are prioritizing “Made in America” rail projects to boost local jobs and reduce reliance on international supply chains.

The company's Hornell plant exemplifies this strategy. By producing car body shells domestically with AI-driven robotics, Alstom avoids tariffs and geopolitical risks while meeting U.S. Buy America requirements. This reshoring model is scalable: the plant's capacity could support future contracts for Amtrak's Northeast Corridor upgrades or California's high-speed rail project.

Risks and the Case for Caution

Investors should note risks, including execution delays—Alstom's first M-9A deliveries aren't expected until 2029—and potential cost overruns. The company's FCF volatility also demands scrutiny, as working capital swings could pressure margins. Additionally, competition from smaller U.S. rail suppliers or a slowdown in state funding could curb demand.

Why Alstom Deserves a Spot in Infrastructure Portfolios

Despite these risks, Alstom's combination of a robust order backlog, recurring service revenue, and alignment with U.S. policy priorities makes it a compelling investment. The MTA contract alone provides visibility through 2032, while the Hornell plant's expansion signals long-term commitment to North America. For ESG-focused investors, the company's focus on energy-efficient railcars and job creation in underserved regions adds further appeal.

In a sector where many peers struggle with aging fleets and underinvestment, Alstom is uniquely positioned to capitalize on the North American rail renaissance. Its stock—already up over 40% since mid-2023—could climb further as contracts materialize and the company's financial discipline takes hold. For infrastructure investors, this is a buy-and-hold opportunity with decades of tailwinds.

Investment Recommendation: Consider adding ALSTOM (ALSO.PA) to portfolios with a 3–5 year horizon, targeting entry points below its 52-week high. Monitor FCF improvements and order flow from the MTA and Amtrak's Avelia Liberty program for near-term catalysts.