[Click e-Stock] "US Quanta Services Sees Revenue Surge on Explosive AI Power Demand"

On the 24th, Kiwoom Securities offered a positive outlook on Quanta Services (PWR), a North American power infrastructure solutions company, stating that it is expected to be a direct beneficiary of the surging power demand from artificial intelligence (AI) and data centers.

On this day, Park Kihyun, an analyst at Kiwoom Securities, said, "AI data centers and power grid modernization are the key investment points."

Quanta Services is the No. 1 company by market share in the North American power and utility infrastructure market. It provides integrated services that cover the entire energy infrastructure, including transmission and distribution networks, substations, and renewable energy power plants. In particular, it is evaluated as having a unique competitive edge in ensuring project certainty and speed, backed by a skilled field workforce of about 69,500 people.

Analyst Park said, "The company is evolving beyond a simple power grid construction contractor into a key beneficiary of AI data center infrastructure," adding, "Currently, data center-related revenue accounts for around 10%, but its related order backlog is recording the steepest growth among all business segments." Management has provided guidance (its own earnings forecast) that performance in the technology and load-focused facilities segment (including data center-related revenue) will increase by 60% to 80% year-on-year this year.

The company is also showing solid earnings growth. In the fourth quarter of fiscal year 2025, revenue came in at 7.84 billion dollars (up 19.7% year-on-year), and adjusted earnings per share (EPS) were 3.16 dollars (up 7.5%), both beating market expectations. Total order backlog reached an all-time high of 44 billion dollars, and short-term backlog to be recognized as revenue within the next 12 months amounted to 25.9 billion dollars, securing downside protection for earnings growth.

Its competitive edge through supply chain vertical integration is also an investment point. Analyst Park said, "To cope with material supply shortages, the company plans to invest a total of 500 million to 700 million dollars over the next several years in manufacturing power transformers," and predicted, "The capability to directly design and produce key materials will serve as a powerful moat in a market environment where lead times are getting longer."

However, in terms of valuation (share price level relative to corporate value), its 12?month forward price-to-earnings ratio (PER) is about 42 times, which is higher than the industrials sector average. Analyst Park said, "Starting this year, the growth rate of adjusted earnings per share is expected to be in the 20% range, so the multiple burden will ease over time," adding, "It is also positive that the company has maintained financial soundness despite its aggressive mergers and acquisitions (M&A)."

He added, "The company is moving away from the traditional short-term bidding model of 1 to 2 years and is seeking to build 5 to 10-year long-term partnerships with utility customers," and, "If this succeeds, both the stability and the quality of earnings in its regulated utility-related business, which accounts for half of its revenue, will be strengthened at the same time."