🏗️Why construction stocks are ripping over AI demand

A slightly less glamorous group of AI beneficiaries are getting their moment in the spotlight: the staid construction and engineering companies performing the nuts-and-bolts work of clearing sites, pouring concrete, running wiring, and designing water and HVAC systems.

• Analysts and tech executives say construction work itself has become another big bottleneck in the AI buildout, putting a significant amount of negotiating leverage in the hands of the companies performing the work. 

• Construction and engineering companies like Comfort Systems, MasTec, Sterling Infrastructure, and Everus Construction are seeing their profitability rise, and in some cases, hit record highs, as they find themselves in a strong position to negotiate with tech companies desperate to get data center “shells” — as the structures are commonly called — built and powered up as quickly as possible.

• The S&P 1500 construction and engineering sub-index, a group of 16 mid-to-large cap companies, is up more than 25% in 2026 and has more than doubled over the past 12 months. (For comparison, the entire S&P composite 1500 is down slightly this year.)   

For many of these companies, levels of profitability are hitting never-before-seen heights, as hard-hat executives find themselves, remarkably, in a powerful position to negotiate with the world’s largest companies trying frantically to spend a seemingly inexhaustible amount of money on AI. 

The Takeaway

In part, contractors are benefiting from the clear imperative hyperscalers have to get data centers built as quickly as possible, as tech executives fixate on the lack of powered-up “shells” as the hurdle to maximizing AI-related profits. Late last year, Microsoft CEO Satya Nadella said, “It’s not a supply issue of chips; it’s actually the fact that I don’t have warm shelves to plug into.”

Analysts at Jefferies in a note last month reported that some 25 data centers had been delayed or canceled in January, a 56% increase from the prior month.

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For the past few years, the AI boom has been defined by experimentation: launch everything, chase each use case, and figure out the business later.

That phase is winding down.

Over the span of a few days, Alibaba, Microsoft and OpenAI each made moves that reflect the same shift: AI is no longer an experiment. It’s the core business.

• Microsoft is combining its consumer and commercial Copilot efforts into a single system, aiming to reduce “manual coordination,” or human intervention, and make its AI more useful for actual work. 

• Alibaba is consolidating its AI efforts into a new unit led by CEO Eddie Wu, who framed the shift around capturing a “historic opportunity” as AI agents take on a growing share of business tasks.

• OpenAI is pulling back from its sprawl, with leadership warning it can’t afford “side quests” as it doubles down on coding and enterprise productivity.

• Meanwhile, with each release — spanning legal and finance, coding, and office work — Anthropic has put pressure on traditional software vendors, showing how AI can take over tasks that previously required dedicated tools or teams.

• All of these companies are spending heavily on AI infrastructure — and they need to show that it pays off. That means focusing on the use cases that generate real revenue, especially in enterprise environments.

Now that the money is getting very real, who gets to keep it is a matter of crucial importance. 

Microsoft may be about to take its biggest AI partner to court as the longtime backer of OpenAI weighs legal action over the latter’s $50 billion deal with Amazon, arguing it could violate a key clause in their exclusive cloud deal requiring OpenAI’s models to run through Azure. Amazon and OpenAI say they’ve found a workaround. Microsoft executives disagree.

The Takeaway

Here’s another sign Anthropic’s enterprise tools are killing it: The AI firm now captures 73% of all spending among companies buying AI tools for the first time according to data from Ramp, a fintech company that provides corporate cards and expense management software. That’s up from 50% in January, when it was tied with OpenAI.

Big Tech is pivoting from experimentation to revenue — and enterprise is where that shift is playing out.

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The two AI titans are locked in a fierce battle to secure substantial new revenue streams to help realize their AI dreams of unlocking AGI, but the rival startups are cut from a different cloth and have very different strategies for releasing products. And one approach appears to be winning out.

See the side-by-side timeline

• 🏀 March Madness: Today is the start of March Madness! Based on the prediction markets, the close games we’ll have our eye on include  No.11 VCU taking on No. 6 North Carolina, 10-seed Texas A&M is up against No. 7 Saint Mary’s. No. 9 TCU vs. No. 8 Ohio State, then No. 9 Saint Louis up against No. 8 Georgia, and then No. 11 South Florida vs. No. 6 Louisville. May the odds be ever in your favor. 

• 🏀 Bracketology: For the math-brained among us, perhaps the most interesting of the March Madness bracket props involves the odds around different seeds making it through different stages of the tournament. There are around 50-50 odds that the highest (i.e., worst) seed to make the round of 32 will be either a 12 or 13, while there’s a 25% to 30% chance that a No. 11 seed will be the highest remaining in the Sweet 16, and a 34% chance that either a 6 or 7 will be the highest to make the Elite Eight. 

• 🏀NCAAW: Meanwhile, it’s still the last two games of the First Four over in the women’s tournament with Southern taking on Samford for the right to claim a 16 seed and Virginia taking on Arizona St. for a No. 10 seed. 

*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.

• Earnings expected from Alibaba, Accenture, Darden Restaurants, FedEx, Planet Labs, Firefly Aerospace, and Gemini Space Station