Business
European Construction Stocks Gain as U.S. Tech Giants Push Data-Center Expansion
European Construction Stocks Gain as U.S. Tech Giants Push Data-Center Expansion
About this update from Prysmian S.p.a.
By Joe StonorEuropean stocks linked to building artificial-intelligence data centers surged to all-time highs as investor exuberance around AI extends to construction companies.Shares in German group Hochtief rose close to 16% to 529 euros, making it the sharpest rising stock in the Europe-wide Stoxx 600. Spanish construction group ACS--which owns a nearly 78% stake in Hochtief--jumped 9.8%. In Milan, shares in electrical-cables manufacturer Prysmian rose 10.5%.ACS and Hochtief develop and construct data centers and energy infrastructure across Europe and the U.S. Prysmian manufactures optical fiber cables that carry the data needed to feed AI models.All three companies traded at record highs in afternoon European trade and have more than doubled in value over the past year as investors poured capital into the picks and shovels driving the AI rush. Facebook owner Meta Platforms, Google parent Alphabet, Amazon.com and Microsoft have all detailed surging spending on AI infrastructure last month.The growth of AI is placing increasing demand on energy infrastructure across the world, said Helen Jewell, BlackRock's international chief investment officer for fundamental equities.The construction sector will benefit from a long-term uptick in profitability as the U.S. tech giants--the so-called hyperscalers--increase their investments into the infrastructure that sustains AI, analysts at Jefferies wrote in a note to clients. The analysts lifted their share-price targets for Hochtief and ACS by 24% and 23%, respectively.The soaring investment is expected to drive growth for Hochtief's U.S. subsidiary, Turner Construction, according to Jefferies.Turner was among contractors selected by Meta Platforms in February to work on a data-center project in Indiana valued at $10 billion. Data centers represent around 37% of Turner's $44.3 billion project backlog, the company said in March.Hochtief and ACS are set to report first-quarter earnings on May 11 and May 12, respectively.Meanwhile, Prysmian is close to confirming long-term agreements with hyperscalers that would increase its optical cable capacity by between 40% and 50%, the group's Chief Executive Massimo Battaini said in an interview with Bloomberg TV Tuesday.Stocks of other European companies linked to data-center expansion also gained, with Schneider Electric rising 4.7% and Zurich-headquartered ABB rising 2.75...