Sterling Targets 25% Growth in 2026: Can Data Center Demand Sustain?

Sterling Infrastructure, Inc. STRL is setting a bold tone for 2026, targeting 25% or higher growth across revenues, earnings and adjusted EBITDA. This ambitious trajectory is anchored by a record $3 billion signed backlog, a 78% year-over-year increase and a total opportunity pipeline approaching $4.5 billion. One of the primary catalysts for this strong growth is the acquisition of CEC Facilities Group in September 2025, which contributed $129.1 million to STRL’s total revenues in the fourth quarter of 2025 alone. But the durability of that outlook hinges heavily on sustained momentum in data center and mission-critical construction.

The E-Infrastructure division delivered explosive results in 2025, with full-year revenues rising 59% and fourth-quarter revenues surging 123% year over year. To sustain this momentum, STRL is expanding into high-growth geographies like Texas and the Pacific Northwest while simultaneously investing in a 300,000-square-foot modular facility to increase productivity and mitigate labor shortages. Looking ahead, management expects E-Infrastructure revenues to grow 40% or more in 2026, supported by continued data center expansion, particularly in high-growth regions like Texas.

At the same time, the company is enhancing execution through vertical integration, modular construction and AI-led productivity gains, which are improving efficiency and margins. In fourth-quarter 2025, adjusted EBITDA jumped 70% year over year to $142.1 million, while gross margin expanded 30 basis points to a record 21.7%, driven by a shift toward higher-margin services and a favorable mix. Sterling’s diversified portfolio and the shift toward higher-margin, large-scale projects are enabling it to maintain the significant margin expansion streak in the upcoming period.

Overall, Sterling’s 25% or more growth target appears firmly anchored to the assumption that the data center supercycle remains intact. With a strong backlog, expanding geographic reach and deepening customer relationships, the company is well-positioned to capitalize, but its trajectory will closely track the strength and longevity of that tailwind.

Sterling’s Competitive Position

Sterling operates in a highly competitive infrastructure construction landscape, competing with larger engineering and construction players such as MasTec, Inc. MTZ and EMCOR Group, Inc. EME.

MasTec is a diversified infrastructure contractor with strong exposure to communications, power delivery and energy markets. It plays a key role in enabling data center expansion through transmission, distribution and fiber deployment projects that support power and connectivity requirements. MasTec’s broad service portfolio and scale provide resilience and consistent project flow during periods of elevated infrastructure investment.

In comparison, EMCOR specializes in electrical and mechanical construction and services, with significant exposure to mission-critical facilities such as data centers, semiconductor plants, life sciences and energy infrastructure. While data centers represent a meaningful growth driver for EMCOR, they are part of a more diversified mix of commercial and industrial end markets.

STRL Stock’s Price Performance & Valuation Trend

Shares of this Texas-based infrastructure services provider have gained 37.8% over the past three 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 30.12, 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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