Sterling Infrastructure, Inc. STRL has become a direct way to play the next leg of mission-critical construction. Management is leaning into structurally expanding end markets, with demand tied to large-scale data centers, semiconductor fabs and advanced manufacturing.
Momentum is already visible in the numbers. In the first quarter of 2026, signed backlog climbed 78% year over year to $3.8 billion, while combined backlog increased 131% to $5.2 billion, with total visibility approaching nearly $6.5 billion after adding future phases.
With a Zacks Rank #1 (Strong Buy), the setup is compelling for investors focused on near-term estimate momentum and durable multiyear demand signals. You can see the complete list of today’s Zacks #1 Rank stocks here.
STRL is Leveraged to Mission-Critical Construction Cycles
Sterling’s growth engine is increasingly concentrated in E-Infrastructure Solutions, which contributed 59% of total revenues in 2025 and serve data centers, semiconductor fabs, large manufacturing and related power-intensive builds.
What makes this cycle different is the duration. Customers are executing multiyear capital plans, and more than 90% of signed E-Infrastructure backlog is tied to mission-critical work. Management has reiterated that data center demand is expected to continue for the foreseeable future, supporting revenue conversion and pricing discipline beyond 2026.
That’s a useful context frame when comparing peers exposed to infrastructure buildouts such as Quanta Services $PWR, Inc. PWR and EMCOR Group, Inc. EME, which also operate in complex, labor-constrained project environments where schedule certainty can drive win rates and margin outcomes.
Sterling’s Integrated Site and Electrical Model Is the Differentiator
This buildout cycle is rewarding contractors who can reduce handoffs and compress schedules. Sterling’s integrated offering, combining site development with mission-critical electrical capabilities, is scaling faster than expected and is showing up in improving win rates and better execution certainty. A key proof point came in the first quarter of 2026, when two data center campuses moved to integrated execution six-eight months earlier than planned. Management tied the shift to cross-sell traction and schedule compression benefits, which matter in time-sensitive customer environments where delays can cascade into commissioning timelines.
Integration also supports backlog quality. With disciplined bid selection and expanding scope, Sterling can capture a larger share of wallet on the same campus, improving the mix toward higher-value work and reinforcing its targeted margin trajectory over time.
STRL’s Mega-Fab Award Extends the Timeline Into 2027-2028
Sterling’s visibility is not only deep but also extensive. Management highlighted a first-phase award for a mega-fab campus that is expected to run through late 2027 or early 2028, adding duration and a clearer line of sight beyond the near-term construction cadence.
That duration matters because it smooths the revenue bridge as projects phase in and out. It also reinforces the idea that Sterling’s mission-critical demand is not limited to a single pocket of activity but spans multiple end markets with overlapping build cycles.
The longer-term semiconductor trend adds another tailwind. Management expects the broader U.S. semiconductor wave to accelerate near decade-end, around 2029 to 2030, which supports the argument that fab-related work can remain additive even after the current tranche of awards burns through.
Sterling’s Modularization and AI Tools Aim at Productivity
Operational enablers are a central part of Sterling’s margin story. Management cited AI tools that have already increased project manager capacity by about 15%, a direct productivity lever that can help scale execution without matching overhead growth one-for-one.
Sterling is also investing in modular manufacturing to reduce field labor intensity and improve schedule and quality outcomes. The modular manufacturing program is expected to triple capacity within roughly 18 months under a newly leased facility, with additional U.S. locations planned over a similar timeframe. Those initiatives support the broader profitability roadmap inside E-Infrastructure, where adjusted operating margins are targeted in the mid-20% range for 2026, with further improvement anticipated as projects grow in complexity and scale.
STRL’s Workforce Scaling is Both a Catalyst and a Constraint
Sterling is also investing directly in labor capacity. Management has pointed to efforts to expand electrician capacity through apprenticeship programs and acquisitions, aligning workforce buildout with the rising mix of integrated site and electrical delivery. At the same time, tight labor availability is a real constraint. The scale-up period can pressure ramp timing, schedules and margins during 2026, particularly as larger integrated awards increase operational complexity and the company works through inherited, lower-margin electrical work.
This is where execution discipline will be the separator. The combination of modularization, training and bid selectivity is designed to mitigate bottlenecks, but quarterly variability can still emerge when phasing shifts or project starts to move.
Sterling’s “Trend Checklist” for Investors Tracking 2026
The first item to watch is backlog conversion: signed backlog levels, combined backlog momentum and the book-to-burn trajectory that signals whether awards are replenishing burn at an attractive rate.
Next is monitor mix and margin progress in the electrical platform. Management targets 300-500 basis points of margin expansion within 12-18 months as lower-margin categories exit and integrated delivery scales, shifting electrical from a scale driver toward a margin contributor.
Finally, it is prudent keep an eye on quarterly volatility risk from project phasing and seasonality. Management notes that the first and fourth quarters are historically the lowest, and Texas low-bid highway work is winding down as resources redeploy toward E-Infrastructure, which can create uneven quarter-to-quarter comparisons even when the multi-year trajectory remains intact.
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