On August 10, Babcock & Wilcox (NYSE:BW) reported second-quarter results that turned a story about power generation into a story about artificial intelligence. Revenue jumped 130% year over year to $319.7 million, and executives raised the full-year adjusted EBITDA target to a range of $80 million to $105 million. The bigger surprise sat further down the call: bookings, backlog, and the company’s project pipeline all moved by orders of magnitude most industrial companies never see in a single year.
Bull Case: The Data Center Gold Rush
B&W’s project pipeline now tops $14 billion, and it includes 4 to 6 gigawatts of power generation opportunities tied to utility, industrial, and data center demand. That pipeline is starting to convert. Bookings in the first half of 2026 hit $2.7 billion, an increase of more than 1,058% compared to the first half of 2025, and backlog reached $2.6 billion in the second quarter, up 533% from a year earlier. Those are not modest gains. They are a sign the company’s core business and its newer AI-driven projects are landing contracts at a pace the balance sheet had not previously reflected.
The company’s first data center project, Base Electron in North Dakota, is progressing ahead of expectations and on budget, with a conditional use permit application already submitted and construction slated to begin in early 2027. Management expects a second data center project to reach full notice to proceed this year, and B&W has already secured manufacturing reservation rights for an additional 1 gigawatt of steam turbines from Siemens Energy, twenty 50-megawatt units with the first generator sets arriving within 12 to 14 months. Combined with $131.7 million in first-half revenue already coming from Base Electron, the AI power buildout is starting to show up in the financials rather than just the pipeline.
Bear Case: Growing Pains Behind The Numbers
Growth has not come without friction. A shortage of skilled welders and electricians in the United States raised direct costs and hurt efficiency on a specific construction project during the second quarter, and management is responding with union incentives, rehires, and delayed retirements to keep labor available. The company says it does not expect labor shortages to persist, in part because it has shifted its near-term construction focus toward variable-priced contracts, but the episode is a reminder that scaling a project pipeline this fast requires more than a signed contract.
The headline profit numbers also carry an asterisk. B&W posted a net loss of $62.7 million in the first half of 2026, driven largely by $77.4 million in noncash warrant and other stock-related costs tied to the rise in its own share price. Strip those out and adjusted net income was $14.7 million, but the swing shows how sensitive the reported bottom line is to the stock’s own volatility. Meanwhile, BrightLoop, the company’s lower carbon technology initiative, is still in the fabrication and site preparation stage at its Massillon, Ohio project, with commercial operation not expected until late 2027, a reminder that not every growth avenue is close to paying off.
What The Smart Money Sees
Hedge fund ownership in B&W rose from 32 funds to 37 in the most recent quarter, which points to institutions adding rather than trimming positions. Short interest sits at 13.48% of float, a level that signals a real bear camp still betting against the stock. As of August 19, the forward price-to-earnings ratio of 140.85 prices in a substantial amount of future growth, leaving little room for a slip in execution.
The Tension Investors Must Watch
B&W has gone from a company managing coal plant refurbishments to one embedded in the AI power buildout, and the backlog and bookings numbers back that shift up. But the labor strain on a single construction project and the size of the noncash charges tied to the stock’s own rise show that growth at this pace carries real operating and accounting noise. For the pipeline to keep converting, the second data center project needs to reach full notice to proceed, and Base Electron’s 2027 construction start needs to stay on schedule.
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