3 Data Center Stocks Facing The AI Power And Regulation Squeeze

Data centers once looked like a straightforward way to ride the AI buildout. Now rising backlash over power, water, and regulation is turning that story on its head and creating new winners and losers. Investors who ignore where construction and engineering stocks sit in this tug of war risk missing important shifts. This article profiles 3 stocks closely tied to the latest policy squeeze on data center infrastructure.

The stocks highlighted below are only a small sample of what this theme can offer, and the full screen surfaced 32 more construction and engineering companies with equally compelling data center narratives that are not covered in this article.

If you want to go straight to the source and identify your own high-conviction ideas, head into the Data Center Construction and Engineering Services screener to filter and analyze the broader field of data center construction and engineering services stocks.

Powell Industries (POWL)

Powell Industries plugs directly into the data center construction story through its custom power systems, giving it a clear role in how hyperscale facilities handle high-capacity, always-on electricity demand while still serving a broad mix of industrial and utility customers.

Powell Industries generates about US$1.2b from electric equipment such as custom switchgear, integrated power control rooms, and related services, with a market cap of roughly US$6.9b signaling how investors currently size this specialist in critical electrical infrastructure.

For investors focused on power-heavy data center projects, the real interest in Powell Industries is how its expanding automation and control capabilities might reshape its earnings mix over time.

"There is significant optimism that Powell's acquisition of Remsdaq and expansion into the electrical automation and SCADA markets will quickly and materially accelerate both revenue and margin growth, while integration risks and the lengthy sales cycles for new offerings could temper near-term financial impact."

What ultimately matters is how one unresolved pressure on future project economics feeds through to pricing power and long-run profitability.

That pricing power question is exactly where the full narrative for Powell Industries lays out how data center demand, backlog quality, and execution risks could be converging for Powell Industries.

IES Holdings (IESC)

IES Holdings ties directly into the data center construction and engineering theme through its integrated electrical and low-voltage work, earning power from US$1.5b in Communications, US$1.2b in Residential, US$700 million in Infrastructure Solutions, and US$561 million in Commercial & Industrial, with a market cap near US$13.2b.

Where Powell focuses on specialized equipment, IES Holdings gives you exposure to the wiring, cooling, and low-voltage systems that turn bare concrete into working data centers. This role in the current build cycle has started to draw more attention.

"IES is well positioned to continue making a healthy impact within it's sector due to the continued demand for hyperscaling datacenter construction."

What matters now is how one shift in where that work is concentrated feeds through to future demand, pricing, and project margins.

That shift in project mix is exactly what the full narrative for IES Holdings unpacks, including how accelerating hyperscale demand could be masking both contract risk and upside optionality.

nVent Electric (NVT)

nVent Electric helps wire the AI buildout behind the scenes, supplying the electrical connection and protection hardware that keeps data centers powered, cooled, and online. It remains a broader electrification play, yet its role in mission critical data infrastructure is becoming more central to the story.

nVent Electric generates about US$3.4b from Systems Protection and roughly US$1.4b from Electrical Connections, and with a market cap near US$26.8b it sits among the larger electrical infrastructure players in this data center focused screen.

"Accelerating AI related data center spending, supported by nVent Electric’s roughly $2.5b backlog and guidance that total data center sales are expected to move above $2b in 2026, points to a pipeline of projects that could sustain revenue and support adjusted EPS growth as that backlog converts."

What really decides how rewarding that pipeline becomes is how one pressure on future project economics filters through to margins and returns over time.

That margin story is where the full narrative for nVent Electric shows how accelerating AI demand, capital intensity, and grid constraints could reshape nVent Electric’s risk and upside profile.

Seeking Fresh Alternatives Before They Fly

New themes can move quickly. The strongest stories may be identified early, then momentum builds and attractive entry points become harder to find. Scan these fresh ideas before the crowd arrives and consider your options.

• Identify cash generative companies that still trade on reasonable terms by scanning a curated 31 high quality undervalued stocks while valuations remain under the radar.
• Explore the AI buildout from a different angle by reviewing the hand picked 90 AI infrastructure stocks focused on chips, cooling, and grid upgrades before momentum accelerates.
• Assess potential income streams by reviewing a filtered 7 dividend fortresses while yields remain elevated and some of the more resilient payouts receive less attention.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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