Many assumed the race for AI dominance would be decided by computing power, including faster chips, larger servers, and more data. But it’s now clear that the real bottleneck lies outside the four walls – in the physical infrastructure that makes these facilities possible: substations, transmission lines, gas pipelines, and cooling systems.
Meeting this demand won’t come cheap. By 2030, companies are expected to invest nearly $7 trillion in data center infrastructure, with more than 40% of that spending in the US.
For the E&C (Engineering and Construction) industry, which is responsible for designing, engineering, and building large-scale infrastructure projects such as power plants, pipelines, and data centers – this buildout represents more than a short-term opportunity. It’s the foundation of a multi-decade growth cycle as technology and industrial development converge.
AI is only part of the story. The same firms are also benefiting from record investment in grid modernization, renewable energy, and U.S. manufacturing onshoring, as both private and public capital flow into the infrastructure needed to sustain long-term growth across the economy.
The Power Demand Reshaping the Industry
The current infrastructure cycle is unlike any that came before it. For much of the past three decades, energy demand in the US remained largely flat as efficiency gains offset economic growth.
That dynamic has reversed. For the first time in a generation, true load growth is returning to the grid, driven by AI workloads, data center construction, and the electrification of new industries.
Power demand from the US electric grid is projected to rise 25% by 2030. Meeting that growth will require adding roughly 80 gigawatts (GW) of new generation each year – the equivalent of building 80 nuclear power plants annually, or about twice the pace of the last decade.
The real challenge isn’t generating electricity, but connecting it. Access to the grid and shortages of key equipment such as transformers and switchgear have become major bottlenecks.
By 2027, investment in transmission projects – the high-voltage lines that carry electricity from generation sources to substations – is expected to reach $230 billion annually, up from $174 billion in 2024. Yet in some regions, utilities are already warning some large customers that they cannot interconnect new loads for five to seven years, forcing data center operators and developers to add on-site generation or hybrid energy systems to secure power in the near term.
For now, these stopgaps are essential. But the underlying issues – from slow permitting to manufacturing backlogs – are logistical rather than technological. Solving them will depend on policy changes and faster expansion of equipment production across the supply chain.
How E&C Firms Are Poised to Benefit
Despite the rapid growth in the E&C sector, not every firm will benefit equally. The leaders in this cycle will be those with the scale and execution expertise to manage multi-year projects, control costs, and maintain strong relationships with utilities and developers.
In a tight labor market, firms that can self-perform critical work using their own crews and equipment – rather than relying heavily on subcontractors – hold a clear advantage. That internal control improves scheduling reliability, cost discipline, and ultimately, margins.
Scale also matters. Companies with the balance sheet strength to invest in fleet upgrades, workforce development, or acquisitions of specialized capabilities can take on larger, more technically demanding projects.
In the near term, momentum remains strongest in renewables, solar, and battery storage, though growth may moderate after 2030 as tax incentives phase out. The next leg of expansion will likely come from natural gas infrastructure – pipelines and generation assets that provide firm, 24/7 power to AI data centers and large manufacturers. Gas demand is expected to remain elevated through the decade as renewables alone cannot meet baseload needs.
As a result, E&C firms with strong positions in gas pipelines, power delivery, and transmission construction are best positioned for the next decade of growth. At the same time, telecom, fiber, and nuclear are emerging as complementary opportunities, creating new layers of growth and stability as infrastructure demand expands.
Ultimately, the firms best positioned to succeed will be those that can shift resources seamlessly between high-growth segments – from renewables to gas to telecom – while maintaining margin discipline and operational control.
The Risks to Watch
The outlook for the E&C sector is compelling. Most large E&C firms are already booked out three to four years, while gas turbines are sold out for five, underscoring how supply has struggled to keep pace with infrastructure demand.
Still, discipline will be critical. The last major power boom, during the late 1990s internet buildout, ended with oversupply after manufacturers expanded too aggressively and demand cooled. This time, suppliers are expanding cautiously, increasing output only when they have multi-year visibility. That restraint has kept balance sheets healthy, but it also means supply could struggle to keep pace with record infrastructure demand.
Execution risks remain. Supply chain bottlenecks, labor shortages, and policy volatility could all delay projects or compress margins.
The turning point will come if firms begin announcing large, speculative expansions without firm contracts. That would mark a shift from a supply-constrained to a supply-adding environment – a signal investors should watch closely. For now, the focus should remain on companies that pair growth with discipline: those maintaining strong backlogs, pricing intelligently, and executing profitably even as the cycle accelerates.
The demand outlook for the E&C sector remains too strong to ignore. AI data centers, renewable projects, and onshored manufacturing require massive physical investment, each rippling through the energy ecosystem and driving new pipelines, power plants, and transmission upgrades. Meanwhile, opportunities in nuclear, telecom, and grid technology will further expand the sector’s reach.
This convergence of technology, energy, and construction marks the beginning of a true E&C supercycle – one powered not by speculation, but by the physical infrastructure enabling the digital age.