Sterling's E-Infrastructure Boom Continues: Can Data Centers Keep Up?

Sterling Infrastructure, Inc. STRL is experiencing a period of explosive growth, largely driven by its E-Infrastructure Solutions segment, which has capitalized on the accelerating demands of the data center industry. In the fourth quarter of 2025, E-Infrastructure revenue surged 123% year over year, while full-year revenue in the segment increased 59% year over year, including 40% organic growth. The strong performance reflects Sterling’s increasing focus on mission-critical projects such as data centers, semiconductor facilities and advanced manufacturing plants.

The segment's signed backlog reached record levels, marking a 79% increase from year-end 2024. A primary catalyst for this expansion was the acquisition of CEC Facilities Group in September 2025, which contributed $129.1 million to Sterling’s total revenue in the fourth quarter alone. CEC demonstrated strong independent momentum, with its fourth-quarter revenue growing 21% compared to the same period in the prior year. In terms of forward-looking metrics, the acquisition added approximately $488.9 million to the signed backlog and $715.2 million to the combined backlog, which includes signed contracts and unsigned awards.

Management believes the current demand environment is part of a multiyear infrastructure buildout driven by hyperscale cloud providers and rising AI-related computing needs. As a result, Sterling is expanding geographically into high-growth regions such as Texas and the Pacific Northwest while also increasing its electrical capabilities through acquisitions and modular construction initiatives. For 2026, Sterling has initiated an aggressive E-Infrastructure revenue growth guidance of 40% or higher, supported by a combined pool of signed, unsigned, and future phased work totaling more than $3 billion.

With data center projects becoming larger and more complex, Sterling’s integrated approach, combining site development, electrical work and infrastructure expertise, positions the company to capture a larger share of these mission-critical builds. The key question ahead is whether the pace of data center expansion will continue fast enough to sustain Sterling’s rapid E-Infrastructure growth.

Sterling’s Competitive Position

Sterling operates in a competitive infrastructure construction market alongside larger engineering and construction firms such as MasTec, Inc. MTZ and EMCOR Group, Inc. EME.

MasTec is a diversified infrastructure engineering and construction company with significant exposure to communications, power delivery and energy infrastructure. The company supports data center growth through transmission, distribution and fiber deployment work that enables power and connectivity needs. Its diversified portfolio and scale help maintain steady project activity during periods of elevated infrastructure spending.

EMCOR, by contrast, is a leading provider of electrical and mechanical construction and services with meaningful exposure to mission-critical facilities, including data centers, semiconductors, life sciences and energy infrastructure. While data centers are an important growth area for EMCOR, they represent one component of a broader mix of commercial and industrial end markets.

STRL Stock’s Price Performance & Valuation Trend

Shares of this Texas-based infrastructure services provider have gained 25.3% over the past six months, outperforming the Zacks Engineering - R and D Services industry, the broader Construction sector and the S&P 500 Index.

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STRL stock is currently trading at a premium compared with its industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 28.7, as shown in the chart below.

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Earnings Estimate Revision of STRL

STRL’s earnings estimates for 2026 and 2027 have trended upward over the past 30 days. The estimated figures for 2026 and 2027 imply year-over-year growth of 25.8% and 15%, respectively.

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Sterling currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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