Dycom Stock Soars After Earnings. The AI Data-Center Building Boom Hasn’t Slowed.

Coming into Wednesday trading, shares of telecom and utility construction services provider Dycom were up 70% this year. (Joe Raedle/Getty Images)

Key Points

• Dycom Industries reported fiscal third-quarter earnings per share of $3.63 on sales of $1.5 billion, exceeding Wall Street expectations.
• Dycom acquired Power Solutions for approximately $2 billion, a move to expand into data center construction, with over 90% of Power Solutions’ revenue from data centers.
• Dycom’s stock rose in early trading, following the earnings beat, positive guidance, and the strategic acquisition.

AI is fueling a construction boom across America that shows no signs of slowing down yet. It’s driving higher earnings and merger activity for a host of companies, including the telecom and utility infrastructure builder Dycom Industries .

On Wednesday, Dycom announced fiscal third-quarter earnings per share of $3.63 from sales of $1.5 billion. Wall Street was looking for $3.20 and $1.5 billion, respectively, according to FactSet.

Its backlog of work as of Oct. 25 sat at $8.2 billion, a record for the company.

For the fourth quarter, Dycom expects adjusted earnings per share of between $1.62 and $1.97 from sales of about $1.3 billion. Wall Street currently projects $1.62 and $1.3 billion, respectively.

Along with earnings, Dycom announced the acquisition of Power Solutions, a “premier data center electrical contractor, positioning the company for accelerated growth in digital and data center infrastructure services.”

Power-hungry AI data centers have been a boon to utility and utility service providers, pushing up demand growth for electricity. With Power Solutions, Dycom will be more directly involved in data center construction. Over 90% of Power Solutions’ revenue comes from data- center projects, Dycom said.

“This is a milestone acquisition for Dycom that diversifies our business and significantly enhances our potential to generate long-term growth and value creation,” said Dycom CEO Dan Peyovich. “Power Solutions is a recognized leader and positions us to benefit from continued strong demand for digital infrastructure solutions among hyperscalers and other industry participants.”

Dycom is paying about $2 billion in cash and stock, or roughly 12 times 2025 estimated earnings before interest, taxes, depreciation, and amortization. Dycom currently trades for about 14 times estimated 2025 Ebitda.

The earnings beat, financial forecasts, and news of the acquisition add up to happy investors. Dycom stock rose 10% in Wednesday trading, closing at $325.64, while the S&P 500 and Dow Jones Industrial Average rose 0.4% and 0.1%, respectively.

Coming into Wednesday trading, Dycom stock was up 70% this year and up 46% over the past 12 months. The stock has gained from higher spending on fiber-optic networks and electrical infrastructure.

Write to Al Root at allen.root@dowjones.com