The biggest beneficiaries of the AI boom aren’t all sitting in Silicon Valley. Industrial stocks, the kind of companies that pour concrete, build power grids, and manufacture heavy equipment, have been on a tear that would make most tech investors jealous.
The S&P 500 industrials sector now trades at a forward price-to-earnings ratio above 30. For context, the long-term average for this group sits around 20. That’s a 50% premium over what investors have historically been willing to pay for these companies.
Data centers are the new factory floors
AI models need physical homes, and those homes need to be built, powered, cooled, and connected to the grid. Every new data center is a construction project, an electrical engineering challenge, and a logistics puzzle rolled into one.
Sub-sectors tied to this buildout have posted staggering returns. Defense tech, space, construction and engineering, and power equipment companies have collectively gained over 300% since May 2023, when the generative AI investment cycle kicked into high gear.
