Quanta Services, Inc. (PWR) | The Buildout — AI Infrastructure
The Verdict
Quanta Services is a self-performing specialty contractor to electric and gas utilities, power generators and large load centers. It builds and maintains transmission and distribution lines, substations, pipelines, and the mechanical and electrical systems around data centers. In the AI buildout it is the construction and labor layer — the company that connects new computing campuses to the grid and builds most of what surrounds the chips. It does not make chips or own data centers; it sells the physical capacity to build and interconnect them.
| Market Cap | — |
| Revenue (TTM) | $32.8B |
| Revenue Growth | +25.8% |
| EBITDA Margin (TTM) | 9.1% |
| Net Debt | $6.1B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Quanta self-performs 80% to 85% of its work, which management says allows it to deliver on time and on budget at scale.
- More than 85,000 employees and roughly $250 million a year in training underpin a craft-labor base the company describes as the largest in North America, where management says it takes about four years to make a craftsman and a journeyman.
- Backlog reached a record $53.4B at June 30, 2026, up from $48.5B the prior quarter, with RPO of $33.6B.
- Management says the largest transmission and generation programs are not yet in backlog, leaving a pipeline that has not started converting to revenue.
- Quanta is investing $500M–$700M to double power transformer manufacturing capacity, attacking an equipment bottleneck it names.
What We’re Watching
- Management expects record backlog into Q3 and probably Q4 2026.
- Large transmission and generation awards are guided into backlog in the later half of 2026, with field work in the second half of 2027.
- New York has a data-center pause, and an analyst on the call referenced up to 10 more states potentially acting.
- Craft labor: the four-year apprenticeship cycle sets a rate limit on how fast demand converts to revenue.
The thesis looks strengthening on the record: two consecutive quarterly guidance raises, record backlog with rapidly rising RPO, and a technology end market management says grew to 15–20% of the business in two years. The largest transmission and generation programs remain unbooked, so the compounding management describes has not yet shown up in reported numbers. The open question is whether that pipeline converts on the schedule management gave — NiSource backlog entry in Q3 2026, and large transmission and generation work reaching the field in the second half of 2027.
Earnings Beat
Q2 2026 revenue was $9.56 billion, up 41% from $6.77 billion a year earlier, with gross margin of 16.2%. Adjusted EBITDA was $1.1 billion and adjusted diluted EPS was $4.24, and management called the strength broad-based and organic. Free cash flow of $0.9 billion was described as a record second-quarter result.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $9.6B | $7.9B | $6.8B | +41.1% |
| Gross margin | 16.2% | 14.1% | 13.2% | +300bps |
| EBITDA | $969M | $600M | $602M | +60.8% |
| EPS | $2.96 | $1.52 | $1.52 | +95.0% |
| Total backlog | $53.4B | $48.5B | n/a | — |
| Remaining performance obligations (RPO) | $33.6B | $26.24B | n/a | — |
We are significantly increasing our full year 2026 financial expectations across all metrics.— Duke Austin, CEO, 2026-07-30
Management tone: On the Q2 2026 call, management sounded more confident and more specific than in the prior quarter. It raised full-year guidance across all metrics, closed four acquisitions after none in Q1, and loosened its margin language, describing room in the backside of the year. It was direct that 95% of generation work is not in backlog, and it repeated that it is not willing to take combined-cycle risk that does not meet its contract terms.
Management Guidance
For full-year 2026, management guides to revenue of $39.3–39.7B, adjusted EBITDA of $4.1–4.2B, adjusted EPS of $16.45–16.95, and free cash flow of $2.0–2.5B. The guidance embeds $1.2B–$1.4B of revenue and $120M–$140M of adjusted EBITDA from four acquisitions closed in the quarter. Management described the guide as prudent, saying it bakes in project slips and northern-climate weather, and said free cash flow conversion should stay around 55%, with the high end of a 55–60% range possible or better.
Trajectory
Revenue is accelerating. Q2 2026 revenue of $9.56B rose 21.4% sequentially and 41% year over year, after roughly flat sequential growth through late 2025 and Q1 2026. Gross margin was 16.2% in Q2 2026 versus 13.2% a year earlier. Management attributes the strength to broad-based organic demand across segments, with only about $11M of acquisition EBITDA in the quarter, and says the compounding effect has not appeared yet because the largest transmission and generation programs are not in backlog.
The Model
The model projects FY+1 revenue of $39,800M and EBITDA of $3,900M (a 9.8% margin), and FY+2 revenue of $47,200M and EBITDA of $4,909M (a 10.4% margin). The near term reflects a record backlog and management's full-year 2026 guidance; FY+2 assumes the large transmission and generation programs management says are not yet booked convert to revenue.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $28.4B | $39.8B | $47.2B |
| YoY Growth | — | +40.4% | +18.6% |
| EBITDA | $2.5B | $3.9B | $4.9B |
| EBITDA Margin | 8.8% | 9.8% | 10.4% |
Projections are the median of 5 independent model runs. The model’s revenue sits 17.7% above analyst consensus.
For full-year 2026, management guides to revenue of $39.3–39.7B, adjusted EBITDA of $4.1–4.2B, adjusted EPS of $16.45–16.95, and free cash flow of $2.0–2.5B. The guidance embeds $1.2B–$1.4B of revenue and $120M–$140M of adjusted EBITDA from four acquisitions closed in the quarter. Management described the guide as prudent, saying it bakes in project slips and northern-climate weather, and said free cash flow conversion should stay around 55%, with the high end of a 55–60% range possible or better.
What Could Go Right — and Wrong
- Large transmission and generation programs enter backlog in the later half of 2026 and reach the field in the second half of 2027, as management guides.
- NiSource's Indiana large-load program enters backlog in Q3 2026 as expected.
- Technology and MEP work keeps growing faster than the rest of the business.
- Electric segment margin moves toward the 10–12% range management says is the ceiling.
- Free cash flow converts at the high end of the 55–60% range, or better.
- Large transmission and generation awards slip, delaying revenue that is not yet booked.
- State data-center moratoriums broaden beyond New York and slow new project awards.
- Craft-labor training cannot keep pace, capping utilization and margin.
- Integration of four acquisitions and rising intangible amortization weigh on results.
Looking Ahead
Over the next 12 months the key test is whether the unbooked pipeline converts. Management expects a significant amount of the NiSource Indiana program in Q3 2026 backlog and record backlog into Q3 and probably Q4. Large transmission and generation awards are guided to the later half of 2026, with field work in the second half of 2027. Data-center policy and craft-labor capacity are the variables that could change the pace.
- Q3 2026NiSource backlog entry — Tests the Indiana large-load program booking on schedule.
- Q3/Q4 2026Record backlog prints — Management guides record backlog into the third and probably fourth quarter.
- Later half 2026Large project awards — 765/345/500kV transmission and generation guided into backlog.
- Second half 2027Field work begins — Large transmission and generation programs mobilize to the field.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $23.7B | $28.4B | $32.8B | +19.8% |
| Gross Margin | 13.1% | 13.0% | 14.4% | 12bps |
| EBITDA | $2.1B | $2.5B | $3.0B | +19.4% |
| EBITDA Margin | 8.8% | 8.8% | 9.1% | 3bps |
| Net Income | $905M | $1.0B | $1.3B | +13.6% |
| Free Cash Flow | $1.5B | $1.6B | $2.4B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)14.4%
- EBITDA Margin (TTM)9.1%
- Net Margin (TTM)4.1%
- ROIC10.2%
- FCF Conversion79.8%
- SBC / Revenue0.7%
The Company
Quanta Services is a self-performing specialty contractor to the electric and gas utility, power generation, large load center, manufacturing, communications, pipeline and energy industries. It provides design, engineering, procurement, construction, upgrade and repair and maintenance services. For the AI buildout it builds and maintains the high-voltage transmission, substations, power transformers and breakers that connect new computing load to the grid, and it builds the mechanical, electrical, plumbing and process infrastructure around data centers — what management describes as roughly 80% to 90% of a data-center build less chips.
Quanta reports through two segments: Electric Infrastructure Solutions, which serves the electric grid, power generation and large load center markets, and Underground Utility and Infrastructure Solutions, which serves gas, oil, pipeline and large load center customers. It self-performs 80% to 85% of its work, employs more than 85,000 people, and spends about $250 million a year on training. Power transformer manufacturing sits in Canonsburg, Pennsylvania; Raeford, North Carolina; and Erie County, New York, alongside 7 million square feet of off-site fabrication. Revenue is concentrated in the United States, at 93.4% of Q1 2026 revenue, with Canada at 3.5% and Australia at 2.6%.
Business Segments
Competitive Landscape
Quanta competes against other engineering and construction contractors. Management frames its position around scale, a large craft workforce, self-performance and a total-solutions model set against single-service competitors. It says it negotiates much of its work directly with customers rather than bidding one-off projects, and that it passes on combined-cycle generation work that does not meet its risk terms.
Supply Chain
Quanta sits at the construction layer: downstream of the equipment makers whose products it installs and upstream of the utilities and data-center developers it serves. AEP, NiSource, Duke Energy and Cipher Mining name it directly; most supplier relationships are inferred.
More on PWR: Earnings recap