AI data centers need more than electricity contracts. They need transmission lines, substations and crews that can finish complex projects. Quanta Services, Inc. (NYSE:PWR) and MasTec, Inc. (NYSE:MTZ) give investors two ways to own that construction cycle. Their prices, however, demand very different outcomes.
Using their October 5 closing prices, Quanta’s 2026 adjusted-EPS guidance midpoint and MasTec’s point estimate, Quanta trades at about 41 times earnings, versus roughly 24 times for MasTec. That puts Quanta’s premium near 73%. The question is whether stronger cash conversion justifies paying it, or whether MasTec offers more upside as its growing project book turns into cash.
Quanta and MasTec rank third and fourth on trailing consolidated revenue growth. The leader grew 37.79%, ahead of their 26.30% and 23.46%. Discover the contractor beating both, and the businesses behind its growth.
Quanta has the stronger cash evidence
On July 30, Quanta reported second-quarter revenue of $9.56 billion, up about 41%, and adjusted earnings of $4.24 per share, compared with $2.48 a year earlier. Its $900 million of quarterly free cash flow matters as much as that growth: earnings backed by cash give a contractor more flexibility to acquire capabilities and fund equipment without continually borrowing. A different contractor earns from the cooling complexity inside those campuses. See how EMCOR can capture mechanical work after the equipment choice is made.
Management lifted its full-year adjusted earnings range to $16.45-$16.95 and expects $2 billion-$2.5 billion of free cash flow. Yet the latter range represents only about a 2%-2.4% yield on its roughly $103 billion market capitalization. Strong operations and an attractive starting valuation are different things.
Quanta’s scale and ability to execute across power infrastructure support its case. The counterweight is the price paid for that certainty, plus acquisition integration. Four acquisitions completed during the second quarter and July carried about $1.24 billion of upfront net consideration, including $173 million of stock. The cash portion used debt and cash on hand. Investors should distinguish consolidated growth from organic expansion rather than attribute every additional dollar to AI demand.
Quanta management mapped a $2.4 trillion utility opportunity through 2030 in its earlier outlook. A campus contract captures only part of that potential. Find the power-delivery work that could expand Quanta’s runway beyond individual data centers.
Insider Monkey’s database showed 100 hedge funds with reportable long positions in Quanta at the end of Q2 2026, up from 94 in Q1. Peconic Partners, a prominent holder, reduced its share position by about 5.7%. Wider participation and one manager’s trimming can coexist; neither tells us whether today’s premium will earn an adequate return.
MasTec’s discount comes with a cash-conversion test
In its July 30 report, MasTec’s second-quarter revenue rose about 23% to $4.37 billion, and adjusted earnings reached $2.22 per share. Management’s full-year adjusted earnings forecast of $9.30 provides the denominator for its roughly 24-times valuation. Its $21.4 billion 18-month backlog offers visibility, although that measure is not directly interchangeable with Quanta’s broader total backlog. Construction is only one way to own constrained power delivery: one supplier announced a data-center order exceeding $400 million in May. Find that supplier and the other grid bottlenecks investors can own.
The weakness is cash timing. MasTec produced just $21 million of operating cash flow and negative $59 million of free cash flow in the quarter. One quarter does not establish permanent impairment, but it does show why a lower earnings multiple is not automatically a bargain. Project spending must eventually be recovered through customer collections.
MasTec’s hedge-fund holder count fell to 82 in Q2 from 83 in Q1, while Peconic increased its shares by about 2.8%. September 15 short interest totaled 5,417,357 shares, roughly 8.6% of public float, with about 4.1 days to cover. Those outstanding positions are not evidence of their holders’ motives or a guaranteed squeeze.
Which stock offers the better starting point?
Quanta deserves a premium if its cash conversion and execution advantage persist. But MasTec is my preferred starting point for investors willing to accept uneven collections: a substantially lower guidance-based multiple leaves more room for improved cash conversion to matter. For an equipment alternative, one power-and-cooling supplier grew 47% organically in Q2 yet cost less than its better-known rival on the comparison’s October 2 guidance basis. Discover which supplier, and the cash-flow catch behind its discount.
That preference fails if backlog growth keeps consuming cash or execution setbacks weaken earnings. Quanta becomes more compelling if its expected cash generation rises enough to close the valuation gap, or its price falls. For now, buying the stronger contractor means paying heavily for strength already visible.
