Skanska's Virginia Expansion Accelerates Growth Offensive in AI-Driven Data Center Boom

This Virginia expansion represents a focused expansion play, leveraging a major contract to lock in long-term client relationships and scale infrastructure rapidly. Skanska secured a foundational $242 million contract to build a substantial 250,000-square-foot data center in Virginia for an existing client, with construction beginning in March 2024 and targeting completion by December 2025. This project, including three data halls and site infrastructure, significantly strengthens Skanska's US order intake and its foothold in the data center market, directly fueled by AI-driven demand.

The relationship deepened substantially with a follow-on $58 million expansion contract for the same client. This additional work adds two 4,300-square-meter data halls, completing a massive 22,800-square-meter (approximately 245,000 square feet) facility. The scale of this completed Virginia deployment – nearly a quarter-million square feet – rivals facilities built by top-tier hyperscale cloud providers and underscores Skanska's ability to handle large, complex projects. This repeat business is strong evidence of client satisfaction and trust, enabling rapid scale-up within the same location.

The timing is crucial for Skanska's near-term bookings. Both the core $242 million project and the $58 million expansion will contribute meaningfully to Skanska's US order intake for Q4 2025. While construction progress depends on supply chains and regulatory approvals, these Virginia projects are solid strategic penetrations. Securing both the initial build and significant expansion from a single major client demonstrates Skanska's competitive positioning in the high-growth data center sector and its success in converting demand into multi-phase, high-value contracts.

Growth Mechanics: Order Intake, Market Share & Margins

The company's growth trajectory shows clear sectoral contrasts, with construction headwinds offset by data center opportunities.

The global construction segment orders declined sharply, falling 17% quarter-over-quarter in Q3 2025, according to the interim report. This contraction reflects broader economic pressures in traditional building markets and weighs on overall order intake.

Meanwhile, the data center market presents compelling growth potential. Projections indicate the sector will expand from $69.56 billion in 2024 to between $69.56 billion and $128.14 billion by 2034. North America's dominance in this space - capturing 41-42% of the market share - provides a regional tailwind for the company's offerings.

Input cost pressures threaten to erode margins despite these opportunities. Copper prices have surged 13.8%, raising material expenses. The company is addressing this through modular construction techniques that improve efficiency and reduce waste, though these solutions require upfront investment and may limit near-term margin expansion.

The divergence between construction and data center segments creates operational challenges. While the data center growth trajectory offers long-term upside, the company must navigate both the current weakness in construction demand and rising input costs to maintain healthy margins. The modular construction approach represents a strategic bet that could pay off as projects scale, but requires careful execution to avoid margin compression during the transition period.

Competitive Positioning & Market Pressure

Skanska holds a distinct technological edge through modular construction techniques that accelerate delivery of AI-ready infrastructure, allowing faster project turnarounds than traditional methods. This efficiency advantage helps mitigate some execution risks, though it requires substantial upfront investment in specialized fabrication facilities and supply chain retooling. Meanwhile, AECOM's €1.9 billion Spain project demonstrates growing European competition in high-value infrastructure, but the company's strategic focus remains firmly on US markets where Skanska faces less direct headwinds according to AECOM's press release.

These dynamics occur amid severe sector-wide constraints. Grid planning backlogs now exceed 31.6 gigawatts with average delays approaching four years – a bottleneck limiting new data center connectivity regardless of developer capabilities. Compounding this, electricity price hikes averaging 30% have materially increased operational costs for energy-intensive facilities, compressing margins across the industry. While Skanska's modular approach offers some insulation against timeline volatility, all players now confront these universal pressure points that threaten project economics and rollout schedules. The combination of intensified competition and systemic infrastructure bottlenecks creates a challenging environment where execution speed and cost control become decisive differentiators.

Project Momentum Fuels Growth Prospects, But With Margin Risks

Skanska's recent Virginia data center contract add-ons signal strong momentum in the hyperscale segment, potentially unlocking follow-on work. However, this growth path faces immediate margin pressure from rising input costs. Successfully delivering these high-profile U.S. projects is crucial, as client satisfaction directly influences future win rates and contract renewals. The company's ability to manage this pipeline effectively will be a key valuation driver.

Current construction margins hover around 4.2%, but this profitability is highly sensitive to project timing and energy costs. Evidence suggests a 10% delay in a typical grid delivery cycle could erode margins by half a percentage point, while a 5% rise in energy expenses would have a similar compressive effect. These margins are thin by industry standards, meaning even modest cost overruns or schedule slips quickly eat into viability. The risk here is tangible – missed deadlines or uncontrolled inflation directly impact near-term earnings.

The broader market opportunity is significant. Capturing just 25% of the U.S. hyperscale data center construction market by 2027, up from roughly 15% currently, could theoretically translate into 40% annual order growth. This potential share gain represents a major upside scenario for Skanska's construction arm. Yet, this projection assumes flawless execution at scale and overcoming intense competition from specialized players. Any failure to meet quality or timeline benchmarks could stall this growth and trigger reputational damage, especially given the high visibility of these projects.

Ultimately, the risk-adjusted valuation hinges on Skanska proving it can translate project wins into sustainable profitability. While the Virginia contracts and market share targets are positive catalysts, the margin vulnerabilities to delays and energy costs create a significant downside buffer. Investors should weigh the growth narrative against the operational realities of thin margins in a volatile construction environment.