IBD's heavy construction industry group climbed to an all-time high Thursday, as several stocks in the group — busy building AI data centers — trade in buy zones.
Jacobs Solutions was in buy range from a 152.40 buy point. The buy zone goes to 160.02. Dallas-based Jacobs has a 92 IBD Composite Rating.
In its Aug. 5 earnings report, the company said its data center backlog is growing strongly. In May, Jacobs announced it was working with Nvidia on a master blueprint and simulation for AI data centers. Jacobs said the "digital twin" could become the framework for Nvidia customers globally.
Jacobs stock has a 21-day average true range (ATR) of 1.79%. The average true range, available on IBD MarketSurge, gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq still in a power trend, investors can buy stocks with ATRs up to 8%, though they should not be too concentrated in such stocks.
Quanta Services Provides Power For AI Data Centers
Quanta Services is in buy range from the 424.94 buy point of a cup base. The stock broke out Oct. 2. The relative strength line is making new highs, which is a good sign for the stock's outlook.
Houston-based Quanta specializes in building electric plants and provides other services for the power grid.
The explosion in demand artificial intelligence-based data centers has also meant surging demand for electricity. Mizuho last month said the company is positioned to benefit from a grid-and-electrification "supercycle," with secular growth in data centers, grid modernization and clean energy.
Quanta stock has an ATR of 3.16%. Its IBD Composite Rating is 97.
It's Not All AI Data Centers
Granite Construction is in a flat base with a 112.16 entry, but this week is falling below the 10-week moving average. The current base is late-stage, which makes a breakout to new highs more likely to fail. Granite has a Composite Rating of 94 and ATR of 2.15%.
Watsonville, Calif.-based Granite builds highways, bridges and other civil projects. It is not directly involved in data centers, although construction activity in the company's Southeast region is growing thanks to data centers and other development projects.
Aecom could be forming a three-weeks-tight pattern with a 133.50 buy point. Shares are up 15% from a cup-with-handle breakout in early July.
Rather than shovels, the company provides the brainpower for infrastructure projects, such as engineering, design and project management. Dallas-based Aecom has a Composite Rating of 93 and ATR of 1.86%.
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AI Data Center Stocks: Two Test Key Level
Construction Partners and Tutor Perini are testing their 10-week moving averages. A rebound from those levels would provide follow-on entries for both stocks, which are currently extended from their latest breakouts.
Construction Partners, a builder of highways and roads, has a Composite Rating of 99, the highest in the industry group, and an ATR of 3.3%. Tutor Perini, another construction services firm, owns a 98 Composite Rating and 3.24% ATR.
Everus Construction Group climbed above the 86.06 buy point of a cup-with-handle base Thursday, after Stifel raised the price target to 94 from 88 and maintained a buy rating on the Bismarck, N.D., company. Analysts noted acceleration in the company's transmission and distribution equipment and services business, TheFly.com reported.
Volume was running 39% above average, and the relative strength line is at new highs — two pluses for the breakout bid. The electrical and industrial construction company said in its most recent earnings report that data center work remained a major driver. Everus has a 96 Composite and 3.43% ATR.
AI Data Centers Drive Industry Group
The heavy construction industry group has been in the top 10 of 197 groups the past week, the past month and was also in the top 10 three months ago. The group is up 57% year to date, and its relative strength line keeps rising, its IBD MarketSurge chart shows.
The cost of building data centers, without chips and other equipment, has increased to an annual rate of $43 billion, up 30% year over year and 322% higher than $10.2 billion cost four years ago, Yardeni Research said in a report.
Infrastructure, factory and other types of projects are also driving the heavy construction industry.
FactSet's engineering and construction industry, which overlaps with IBD's heavy construction group, projects earnings to increase 51.7% this year and 15.6% in 2026. Revenue this year should climb 10% and 8% next year.
