A profound secular shift in energy infrastructure is underway, yet this is largely underappreciated in mainstream coverage. The opportunity is huge. Quanta Services Inc. (PWR) shares were up about 10% last Thursday, and there is a long way to go, suggests Joe Markman, editor at Digital Creators & Consumers.
At a recent share price of $322.52, the stock traded at 27.7 times forward earnings and two times sales. Although these financial ratios may seem extended, Quanta is the premier business in the sector, with a huge backlog of unfilled orders and even brighter prospects. Shares should reach $365 during the next 12 months.
Quanta Services Inc. (PWR)
Last week, executives at Quanta Services announced that sales and profits exceeded expectations. They were clear that Artificial Intelligence (AI) is driving robust demand for electricity, a trend that will continue for the foreseeable future.
The world is at the beginning of a profound secular shift in energy consumption. AI technology is advancing at an unprecedented pace, and with it comes a surge in electricity demand that far exceeds previous computing eras.
Quanta Services builds the transmission lines, substations, and renewable energy projects that feed these power-hungry AI data centers. This reality was re-iterated on Thursday as executives spoke with analysts following the first-quarter financial results.
Quanta Services delivered $6.23 billion in revenue-up nearly 24% year-over-year, handily beating expectations. Management also raised full-year guidance for revenue and profits, directly attributing the gains to AI-driven demand for transmission, substations, and “critical infrastructure solutions.” Duke Austin, Quanta’s CEO, highlighted that “transmission will be very robust here,” emphasizing that demand will remain strong as AI-driven electricity demand outpaces supply.
Quanta’s stock is still only at the opening chapter.
Recommended Action: Buy PWR.
