Sterling Infrastructure: Capitalizing on the AI-Driven Data Center Gold Rush

The global digital infrastructure market is undergoing a seismic shift, driven by the explosive growth of artificial intelligence (AI) and the insatiable demand for data center capacity. By 2025, the market has already reached $360 billion, with projections of $1.06 trillion by 2030-a 24.1% compound annual growth rate (CAGR)-as hyperscale and edge data centers expand to meet AI/ML workloads, according to a Mordor Intelligence report. This surge is underpinned by macroeconomic trends: AI is expected to account for 20% of total data center power demand by 2030, while U.S. data center spending hit a record $40 billion in June 2025 alone, as RCR Wireless reported. For investors, the question is no longer if this boom will continue, but who is best positioned to profit. Sterling Infrastructure (STRL) stands out as a prime beneficiary, leveraging strategic acquisitions, geographic expansion, and public-private partnerships to dominate the AI-driven data center landscape.

Secular Tailwinds: AI as the New Infrastructure Megatrend

The AI revolution is redefining global infrastructure demand. Goldman Sachs Research projects data center power consumption will rise 165% by 2030 compared to 2023, with AI workloads accounting for 27% of total power demand by 2027. This is not just a tech-sector phenomenon: AI infrastructure spending in 2025 has already surpassed consumer spending as a GDP growth driver, as Fortune reported. The International Data Corporation (IDC) forecasts AI infrastructure spending will exceed $200 billion by 2028, with servers-particularly those equipped with accelerators-dominating investments (IDC forecasts).

Sterling Infrastructure is uniquely positioned to capitalize on these trends. EarningsIQ shows the E-Infrastructure Solutions segment, which focuses on mission-critical projects like data centers and advanced manufacturing, now accounts for over 65% of the company's backlog. In Q2 2025, data center projects represented 62% of this segment's total backlog, driven by hyperscaler demand and multiyear capital deployment plans from clients, according to a FinancialContent deep dive. The company's operating margins have expanded dramatically, from 21.4% in Q1 2025 to 28% in Q2, reflecting its ability to execute complex projects efficiently, per a BeyondSPX analysis.

Strategic Execution: Acquisitions, Partnerships, and Geographic Expansion

Sterling's growth is not organic alone; it is fueled by strategic M&A and partnerships. Zacks noted that the acquisition of CEC Facilities Group in 2025 added mission-critical electrical and mechanical capabilities, enabling end-to-end solutions for data center clients. This move accelerates Sterling's geographic expansion into Texas and the Northwest, regions experiencing surges in AI infrastructure demand, as highlighted in a Seeking Alpha piece. The company's asset-light model further enhances scalability, allowing it to reallocate resources quickly to high-margin projects.

Public-private partnerships (PPPs) are another cornerstone of Sterling's strategy. The administration's Executive Order 14318 streamlines permitting for data centers-fast-tracking projects on federal lands and revoking outdated policies-so Sterling's federal contracts and Blanket Purchase Agreements (BPAs) position it to secure large-scale infrastructure deals. For example, the company's participation in the GSA Schedule and SEWP programs, listed on Sterling's contracts page, ensures access to federal IT procurement pipelines. These contracts are critical as governments worldwide recognize the need for PPPs to manage the high costs of AI infrastructure, according to a LinkedIn piece.

Addressing Infrastructure Gaps: Power, Grid Constraints, and Supply Chains

Despite the boom, significant infrastructure gaps persist. Deloitte estimates AI data center power demand could surge 30-fold by 2035, straining aging U.S. grids and requiring up to 2 gigawatts of power for the largest facilities. Sterling is addressing these challenges through innovation: its projects increasingly integrate battery storage, smart grid technologies, and renewable energy to stabilize power supply, as detailed in a 174 Power Global blog. Additionally, the company's focus on "shovel-ready" projects-prioritized under new federal guidelines-reduces interconnection delays, a major bottleneck in data center development, according to a RAND commentary.

Financially, Sterling is well-equipped to scale. With $328.6 million in net cash and $84.9 million in operating cash flow as of Q1 2025, the company has ample liquidity for M&A and share repurchases, per a Nasdaq analysis. Its stock has outperformed the industry, rising 35.7% year-to-date, reflecting investor confidence in its AI-focused strategy, as reported by Yahoo Finance.

Conclusion: A High-Margin Flywheel in a High-Growth Sector

Sterling Infrastructure's strategic alignment with AI-driven data center demand creates a powerful flywheel: strong project execution drives margin expansion, which funds further M&A and geographic expansion, reinforcing its competitive edge. As AI infrastructure spending accelerates-projected to hit $500 billion by 2026 in a Forbes projection-Sterling's focus on mission-critical projects, federal contracts, and grid innovation positions it to outperform peers. For investors seeking exposure to the AI infrastructure boom, Sterling offers a compelling blend of secular growth, operational excellence, and macroeconomic tailwinds.