Bentley Systems: Why AI Infrastructure Shift Justifies a Buy Amid Valuation Dip

The AI infrastructure market is set to expand significantly, growing from USD 87.60 billion in 2025 to USD 197.64 billion by 2030 at a 17.71% compound annual growth rate. This growth is driven by GPU shortages, advanced network fabrics, and cloud-native AI adoption, with hardware dominating spending at 72.1% in 2024 and cloud deployment growing at 20.6% CAGR.

Bentley Systems is leveraging its strong market share in engineering software to capitalize on this trend, particularly through digital twin technologies that enable real-time infrastructure simulation and optimization according to Seeking Alpha.

The company's stock has declined 22% year-to-date, leading to a valuation of 18 times earnings, below the sector average of 28 times. This dip has drawn analyst attention, with several upgrading to a 'Buy' rating due to valuation opportunities and improving order and backlog trends. Near-term demand is further supported by a digital twin penetration rate of 12%, indicating growing industry adoption.

However, the market faces restraints such as GPU supply shortages and legacy power infrastructure limitations, which could slow growth. Additionally, the tech sector's ongoing volatility means that growth narratives remain sensitive to macroeconomic shifts and execution risks.

Order Momentum and Efficiency

Bentley Systems' Q3 2025 results revealed a 15% gap between new orders and shipments, signaling robust demand as clients locked in future infrastructure projects despite macroeconomic volatility. This order-to-shipment ratio exceeding 1.0 suggests substitution dynamics are activating, with customers prioritizing long-term digital infrastructure over short-term costs.

. The backlog expanded 18% year-over-year, further underscoring resilience in capital expenditure plans from public and private sector clients.

AI-powered modules accelerated deployment timelines by 40% compared to legacy systems, directly improving cost-performance ratios in complex engineering workflows. Faster implementation cycles allow clients to monetize infrastructure upgrades sooner, creating a virtuous feedback loop where accelerated ROI fuels repeat business. However, scaling these deployments globally introduces execution risks-the company's Q3 earnings call highlighted supply chain constraints in semiconductor-dependent hardware integrations.

While order momentum validates Bentley's infrastructure software positioning, the pace of AI adoption remains uneven across regions. European clients, for instance, demonstrated 22% slower module integration rates versus North American counterparts, reflecting regulatory divergence in data governance standards. These frictions necessitate localized training investments that could pressure near-term margins despite strong revenue visibility.

The combination of backlog growth and AI efficiency gains aligns with three core signals: penetration rate rising in smart infrastructure markets, orders/shipments ratio >1 confirming substitution demand, and cost-performance ratios improving through automation. Investors should monitor Q4 execution on high-complexity deployments as the key near-term gauge of whether scalability challenges remain contained.

Supply Chain & Compliance Realities

GPU shortages are pushing hardware costs higher, a key headwind for the entire AI infrastructure market. While hardware spending still dominates at over 70% of budgets, Bentley's AI tools promise to cut inference costs by roughly 30% (according to Seeking Alpha). This software efficiency becomes increasingly valuable as raw compute becomes scarcer and pricier.

Meanwhile, compliance with upcoming regulations like the EU AI Act introduces new expenses. Bentley anticipates R&D costs could rise by 5-7% in 2026 just to meet these evolving standards. These mandatory investments will test the company's ability to balance innovation with regulatory adherence without significantly denting margins.

The rapid growth of cloud-based AI deployment at 20.6% CAGR also intensifies competitive pressure. Hyperscalers and cloud-native startups are capturing market share, forcing legacy software providers like Bentley to accelerate their own cloud offerings. Successfully scaling these solutions while managing the twin challenges of supply chain constraints and rising compliance costs remains a critical execution hurdle. The company's ability to deliver on its cost-saving software promises and navigate complex regulations will determine how well it withstands these parallel pressures.

Substitution Momentum Gains Validation

The AI infrastructure market's accelerating adoption validates substitution demand, with penetration reaching 12% in 2025 according to market research. This reflects growing customer willingness to replace legacy systems with modern solutions. Complementing this demand signal, Bentley Systems' (BSY) order backlog grew over 15% year-over-year, indicating strong forward visibility as clients commit capital to digital transformation. . These metrics confirm companies like SMX are successfully displacing older infrastructure approaches.

Strategically, two near-term factors require close monitoring. First, the timeline for GPU supply recovery remains critical. Persistent shortages continue to constrain large-scale AI deployments, potentially delaying revenue recognition for hardware-dependent projects. Second, the evolving EU AI Act could reshape 2026 R&D priorities. Compliance requirements may increase certification costs and extend product development cycles for firms operating in regulated sectors.

The current market valuation presents a tactical entry opportunity at 18x P/E, significantly below historical averages. However, sustained growth hinges on converting backlog into shipments. Order-to-shipment ratios must remain above 1.0 to confirm production and delivery capabilities aren't bottlenecks. Investors should remain cautious: scaling AI solutions faces genuine friction in supply chain constraints and regulatory ambiguity, which could pressure margins if costs rise unexpectedly. The long-term growth thesis holds if execution improves, but near-term operational hurdles remain substantial.