We came across a bullish thesis on Quanta Services, Inc. (PWR) on Substack by Bulls On Parade. In this article, we will summarize the bulls’ thesis on PWR. Quanta Services, Inc. (PWR)’s share was trading at $292.38 as of April 29th. PWR’s trailing and forward P/E were 48.49 and 28.49 respectively according to Yahoo Finance.
An overhead view of a powerful electricity transmission tower with in motion cables.
Quanta Services (PWR), while not a household name, is emerging as a foundational force in the artificial intelligence (AI) era through its leadership in building and modernizing the infrastructure that powers the digital economy. The Houston-based company has evolved from a regional electrical contractor into a global infrastructure giant, now employing over 40,000 people and generating $23.67 billion in revenue in 2024. The company’s growth trajectory has been marked by strategic acquisitions, disciplined capital allocation, and a laser focus on long-term infrastructure trends, particularly the massive power demands being created by AI data centers. With the AI boom reshaping global electricity consumption, Quanta’s core competencies in electric grid modernization, substation construction, and renewable energy integration have placed it at the center of this generational shift.
Founded in 1997 through the consolidation of four regional contractors, Quanta has consistently executed a strategy of building scale through acquisition and reinvestment. Its 2023 purchase of Pennsylvania Transformer Technology enhanced its capabilities in grid hardware manufacturing, while the $1.5 billion acquisition of Cupertino Electric in 2024 brought data center construction expertise into the fold. These moves have strengthened Quanta’s positioning in the buildout of AI data infrastructure, allowing it to provide turnkey electrical solutions to hyperscalers and utilities responding to surging data center demand. Quanta’s services are now essential for enabling next-generation data workloads, with AI workloads consuming dramatically more power than traditional computing. As data center electricity usage is expected to more than double in the U.S. by 2030, Quanta stands ready to benefit.
The company’s growth is underpinned by a capital allocation strategy that balances targeted acquisitions with strong free cash flow generation and prudent debt management. Quanta produced $575 million in free cash flow in Q4 2024 alone and maintains modest leverage, which supports both organic growth initiatives and strategic M&A without straining the balance sheet. This financial discipline has helped the company grow consistently without diluting shareholders. In 2024, adjusted EPS rose to $8.97 from $7.16 in the prior year, driven by record revenue and backlog. Management expects this momentum to continue into 2025, guiding to double-digit increases in revenue, EBITDA, and earnings.
Quanta’s AI-driven opportunity is especially pronounced in its Electric Power Infrastructure segment, which designs, builds, and maintains the backbone of modern power delivery systems. Utilities and tech giants are investing heavily in transmission upgrades, substation installations, and renewable integration to meet the staggering power needs of AI applications. The company’s deep experience with smart grid technology and its blue-chip client base, which includes AT&T, Verizon, and BP, gives it a competitive edge in winning large, high-margin contracts. Government incentives like the Inflation Reduction Act further accelerate demand for its services, particularly in wind, solar, and battery storage infrastructure—critical enablers of sustainable energy delivery to data centers.
Despite a few risks—such as labor shortages, regulatory delays, or a pullback in AI infrastructure spending—Quanta’s diversified portfolio, long-term customer relationships, and robust backlog offer a strong buffer. The company ended 2024 with $23.67 billion in revenue, $904.8 million in net income, and significant free cash flow, demonstrating its ability to thrive even amid uncertainty. At a current share price of around $290 and a trailing P/E of 29, the stock trades at a premium to the market, but this is justified by its earnings power, strategic positioning, and expected EPS of $9.90 in 2025. A DCF analysis supports a fair value range of $300–$330, with 15–20% upside potential.
Ultimately, Quanta Services is more than an infrastructure contractor—it is a linchpin of the AI era. As power grids are modernized and AI workloads explode, Quanta’s turnkey capabilities in energy and communications infrastructure position it for years of growth. The company’s strong financials, disciplined execution, and exposure to secular megatrends offer investors a compelling opportunity in a less crowded corner of the AI value chain.
Quanta Services, Inc. (PWR) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held PWR at the end of the fourth quarter which was 58 in the previous quarter. While we acknowledge the risk and potential of PWR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PWR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.