Quanta Services, Inc. (NYSE:PWR) is one of the best AI energy stocks to buy now. Wolfe Research Bullish on Quanta Services (PWR) Amid Accelerating Power Demand On January 19, 2026, Wolfe Research issued a constructive outlook for clean energy, noting that the sector entered 2026 with improving fundamentals following a volatile 2025. At the same time, the firm remains bullish on Quanta Services, Inc. (NYSE:PWR), citing a very manageable impact from President Donald Trump’s second term and less-than-expect ...

Core Insights - The focus is shifting towards energy stocks that support the AI economy as investors become more bullish on energy and infrastructure providers compared to U.S. megacap technology stocks in 2026 [1][2] Industry Overview - AI and big tech dominated equity returns in 2025, but concerns are rising over volatile returns on capital and higher borrowing costs due to aggressive data center expansions by major tech companies [2] - The semiconductor industry is projected to reach $1 trillion in revenue in 2026, marking a 29% year-over-year growth, driven by AI workloads transitioning from training to inference [3] - Deutsche Bank analysts predict 2026 will be a challenging year for AI, citing supply-chain bottlenecks and energy shortages as key constraints [4] Investment Methodology - The list of the 10 best AI energy stocks was curated based on financial media and resources, focusing on companies that supply electricity to AI data centers or provide necessary infrastructure and fuel systems [6] - Hedge fund sentiment was assessed to rank these stocks, utilizing Insider Monkey's hedge fund database tracking 978 stocks as of Q3 2025 [6] Company Highlights - **Bloom Energy Corporation (NYSE:BE)**: Shares surged to an all-time high of $147.93, climbing 470.43% over the past year due to strong investor momentum and a significant agreement with American Electric Power valued at approximately $2.65 billion [10][11][12] - **NextEra Energy, Inc. (NYSE:NEE)**: Jefferies slightly lowered its price target from $88 to $87 while maintaining a 'Hold' rating, citing large data center-related power contracts as a key catalyst for growth [15][16][17] - **Quanta Services, Inc. (NYSE:PWR)**: Wolfe Research issued a positive outlook for clean energy, highlighting Quanta Services as a preferred pick due to its strong presence in power, gas, and transmission markets amid increasing corporate spending on data centers [19][20][21][22]

Core Viewpoint - The article summarizes significant analyst rating changes that are expected to impact the market, highlighting upgrades, downgrades, and new coverage ratings for various companies [1][6]. Upgraded Ratings - Merril Lynch upgraded Darden Restaurants (DRI) from "Hold" to "Buy," raising the target price from $240 to $265, citing a value-driven operational strategy leading to stable customer traffic and market share growth [5]. - Mizuho Securities upgraded Procter & Gamble (PG) from "Neutral" to "Outperform," increasing the target price from $157 to $165, indicating potential for accelerated organic sales growth and improved profit margins [5]. - Royal Bank of Canada’s Cowen upgraded Fortinet (FTNT) from "Hold" to "Buy," maintaining a target price of $100, based on stable operational expectations for FY2026 [5]. - Deutsche Bank upgraded Applied Materials (AMAT) from "Hold" to "Buy," significantly raising the target price from $275 to $390, reflecting a favorable outlook for the wafer fabrication equipment industry in 2026-2027 [5]. - JPMorgan upgraded Acushnet Holdings (GOLF) from "Underweight" to "Neutral," increasing the target price from $74 to $96, due to a diversified product portfolio and pricing power [5]. Downgraded Ratings - Citizens Bank downgraded Trade Desk (TTD) from "Outperform" to "Market Perform," without providing a target price, citing increasing market competition and limited short-term catalysts for stock price appreciation [10]. - Deutsche Bank downgraded Sherwin-Williams (SHW) from "Buy" to "Hold," lowering the target price from $390 to $380, indicating potential downward pressure on valuation multiples until earnings growth can be proven [10]. - Jefferies downgraded Li Auto (LI) from "Buy" to "Hold," significantly reducing the target price from $28.80 to $17.50, due to intensified competition in the home SUV segment [10]. - Harbor Research downgraded Cleveland-Cliffs (CLF) from "Buy" to "Neutral," acknowledging improved fundamentals but noting that the current stock price reflects normalized earnings levels [10]. - JPMorgan downgraded Southern Copper (SCCO) from "Neutral" to "Underweight," slightly adjusting the target price from $119.50 to $117.50, indicating limited upside potential based on current copper spot prices [10]. New Coverage Ratings - Citigroup initiated coverage on Elf Beauty (ELF) with a "Buy" rating and a target price of $110, highlighting market share growth and potential from the acquisition of skincare brand Rhode [12]. - Freedom Capital initiated coverage on Hinge Health (HNGE) with a "Buy" rating and a target price of $59, forecasting a 23% revenue growth and an industry-leading profit margin of 82%-83% [12]. - Susquehanna Group initiated coverage on HEICO Corporation (HEI) with a "Neutral" rating and a target price of $385, projecting an 8% revenue CAGR and a 13% free cash flow CAGR from FY2026 to FY2028, while noting a significant valuation premium [12]. - Cantor Fitzgerald initiated coverage on Quanta Services (PWR) with an "Outperform" rating and a target price of $520, citing a multi-year investment cycle driven by modernization and electrification trends [12]. - Texas Capital initiated coverage on MGM China (MLCO) with a "Buy" rating and a target price of $11.50, emphasizing its unique non-gaming business model and alignment with Macau's tourism recovery [12].

Company Performance - Quanta Services (PWR) has seen strong stock performance, with an increase of 8.1% over the past month and reaching a new 52-week high of $483.29 [1] - The stock has gained 11.1% since the beginning of the year, matching the Zacks Construction sector's performance but lagging behind the Zacks Engineering - R and D Services industry's 18.5% return [1] Earnings and Revenue Expectations - Quanta Services has a strong record of positive earnings surprises, beating the Zacks Consensus Estimate in the last four quarters, with the latest EPS reported at $3.33 against an estimate of $3.25 [2] - For the current fiscal year, the company is expected to post earnings of $12.41 per share on revenues of $27.95 billion, with a year-over-year earnings growth of 17.23% [3] - For the next fiscal year, earnings are projected to be $14.66 per share on revenues of $31.15 billion, reflecting an 11.44% year-over-year change [3] Valuation Metrics - Quanta Services currently trades at a valuation of 37.8X current fiscal year EPS estimates, which is above the peer industry average of 25.1X [7] - On a trailing cash flow basis, the stock trades at 35X compared to the peer group's average of 15.5X, and it has a PEG ratio of 2.08, indicating it is not in the top echelon from a value perspective [7] Zacks Rank and Style Scores - Quanta Services holds a Zacks Rank of 2 (Buy) due to favorable earnings estimate revisions from analysts [8] - The company has a Value Score of D, a Growth Score of A, and a Momentum Score of C, resulting in a combined VGM Score of B [6] Industry Comparison - The Engineering - R and D Services industry is performing well, ranking in the top 16% of all industries, providing a favorable environment for both Quanta Services and its peer, Fluor Corporation (FLR) [12] - Fluor Corporation also has a Zacks Rank of 2 (Buy) and has shown strong earnings performance, beating consensus estimates by 54.55% [11]

Company Performance - Quanta Services (PWR) closed at $473.24, with a daily increase of +2.1%, outperforming the S&P 500's gain of 1.16% [1] - The stock has gained 6.5% over the past month, while the Construction sector increased by 5.32% and the S&P 500 decreased by 0.42% [1] Upcoming Earnings - Quanta Services is expected to report earnings of $3 per share, reflecting a year-over-year growth of 2.04% [2] - Projected quarterly revenue is $7.31 billion, which represents an increase of 11.57% from the previous year [2] Full Year Projections - For the full year, earnings are projected at $10.59 per share, indicating an increase of +18.06%, while revenue is expected to remain at $27.95 billion, showing no change from the prior year [3] Analyst Estimates - Recent revisions to analyst estimates for Quanta Services are important, as positive revisions typically indicate favorable business outlooks [3] - The Zacks Consensus EPS estimate has increased by 0.31% over the last 30 days [5] Valuation Metrics - Quanta Services has a Forward P/E ratio of 37.34, which is higher than the industry average of 24.33 [6] - The company has a PEG ratio of 2.06, compared to the industry average PEG ratio of 1.95 [6] Industry Context - The Engineering - R and D Services industry, part of the Construction sector, has a Zacks Industry Rank of 37, placing it in the top 16% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - Quanta Services, Inc. (PWR) is experiencing improved demand visibility due to steady utility and power infrastructure spending, leading to a more consistent flow of work supported by long-term planning and regulated investment [1][4] Group 1: Demand and Backlog - The company is securing work related to essential grid and power delivery needs, which follow defined planning and execution phases, allowing for more predictable schedules [2] - PWR's backlog reached a record $39.2 billion, up from $33.96 billion a year earlier, indicating solid demand across end markets and a steady pace of project awards [3][9] - The growth in backlog is diversified across multiple areas, reducing reliance on any single project type and supporting smoother revenue timing [3][9] Group 2: Revenue Visibility and Performance - The record backlog enhances revenue visibility for Quanta, with the scale and diversity of committed work suggesting clearer revenue sightlines as infrastructure investment progresses [4] - Quanta's shares have gained 17.3% in the past six months, outperforming the Zacks Engineering - R and D Services industry's growth of 4.6% [8] Group 3: Valuation and Earnings Estimates - PWR trades at a forward 12-month price-to-earnings ratio of 36.95X, higher than the industry's 25.08X [11] - Earnings estimates for 2026 have risen, indicating an expected earnings increase of 17.2% year over year, with projected revenue growth of 11.4% [13]

Core Insights - The declining Federal Reserve interest rates and favorable public spending are positively impacting U.S. infrastructure companies, particularly Comfort Systems USA and Quanta Services, driven by trends in AI-related products and services [1][22]. Group 1: Federal Reserve and Market Environment - On December 10, 2025, the Federal Reserve reduced interest rates by 0.25 percentage points, establishing a benchmark between 3.5% and 3.75%, which is expected to stimulate project initiations and market trends [2]. Group 2: Company Profiles - Comfort Systems specializes in HVAC installation and contracting services, focusing on large-scale projects and inorganic growth initiatives [3]. - Quanta Services is involved in large-scale electrical and utility infrastructure projects, emphasizing margin improvement and a self-perform model [3]. Group 3: Financial Performance and Growth - Comfort Systems has seen a significant increase in demand from the Technology sector, contributing 42% of total revenues in 2025, up from 32% the previous year, with a record backlog of $9.38 billion, reflecting year-over-year increases of 65.1% [5][6]. - Quanta Services reported a record backlog of $39.2 billion as of Q3 2025, up from $33.96 billion a year ago, indicating strong demand visibility [10]. Group 4: Shareholder Returns and Capital Management - Comfort Systems repurchased 0.3 million shares for approximately $125.4 million in the first nine months of 2025 and increased its quarterly dividend by 20% to 60 cents per share [7]. - Quanta Services repurchased 538,559 shares for $134.6 million during the same period, with $365.1 million remaining under its buyback program, indicating disciplined capital management [12]. Group 5: Risk Factors - Comfort Systems faces risks related to its exposure to hyperscale data centers, including potential slowdowns in AI-driven capital expenditures and project delays [8]. - Quanta Services encounters execution risks due to the increasing complexity of infrastructure projects, which may lead to permitting delays and regulatory challenges [13]. Group 6: Valuation and Investment Comparison - Comfort Systems has been trading at a lower forward P/E ratio compared to Quanta over the past five years, indicating a potential growth opportunity at a discounted valuation [15]. - The Zacks Consensus Estimate for Comfort Systems' 2025 EPS indicates an 80.2% year-over-year growth, while Quanta's estimate implies an 18.1% improvement [18][19][20]. Group 7: Conclusion - Given the current market conditions, Comfort Systems is viewed as a better investment option due to its growth potential and superior profitability compared to Quanta Services, which offers stability at a premium valuation [24].

Core Viewpoint - Quanta Services, Inc. is a leading provider in the specialty contracting services sector, particularly in the North American electric utility industry, with strong earnings growth anticipated for the upcoming quarters [1][3]. Financial Performance - Quanta Services is expected to report Q4 2025 earnings of $2.77 per share, reflecting a 1.1% increase from $2.74 per share in the same quarter last year [2]. - For fiscal 2025, the company's EPS is projected to be $9.72, marking an 18.4% increase from $8.21 in fiscal 2024, with further growth expected to $11.38 in fiscal 2026, a 17.1% year-over-year increase [3]. Stock Performance - Over the past 52 weeks, PWR stock has increased by 38.8%, outperforming the S&P 500 Index's rise of 16.9% and the State Street Industrial Select Sector SPDR ETF's return of 21.9% [4]. - Following the announcement of better-than-expected Q3 2025 earnings, PWR stock rose by 1.2% on October 30 [5]. Earnings Expectations - For Q3 2025, Quanta Services reported a revenue increase of 17.5% year-over-year to $7.63 billion, exceeding market expectations, with an adjusted EPS of $3.33 [5]. - The company anticipates full-year earnings between $6.53 and $7.02 per share, with revenue projected between $27.8 billion and $28.2 billion [5]. Analyst Ratings - The consensus among analysts is a "Moderate Buy" rating, with 19 out of 29 analysts recommending a "Strong Buy" and 10 suggesting a "Hold" [6]. - The average analyst price target for PWR is $479.15, indicating a potential upside of 2.7% from current levels [6].

Group 1: Renewable Energy Stocks Overview - Quanta Services, WEC Energy Group, and Clearway Energy are highlighted as key renewable energy stocks to monitor, based on their high trading volume recently [2] - Renewable energy stocks represent companies focused on producing energy from renewable sources or providing related equipment and services, appealing to investors seeking exposure to the shift from fossil fuels [2] Group 2: Quanta Services (PWR) - Quanta Services, Inc. offers infrastructure solutions across various sectors including electric and gas utilities, renewable energy, and communications, operating in the U.S., Canada, Australia, and internationally [3] - The company’s Electric Power Infrastructure Solutions segment is involved in the design, construction, and maintenance of electric power transmission and distribution infrastructure, including smart grid technologies [3] Group 3: WEC Energy Group (WEC) - WEC Energy Group, Inc. provides regulated natural gas and electricity services, along with renewable energy services through its subsidiaries, operating in multiple states including Wisconsin and Illinois [4] Group 4: Clearway Energy (CWEN) - Clearway Energy, Inc. operates in the renewable energy sector in the U.S., with approximately 6,000 net MW of installed wind, solar, and energy generation projects, and around 2,500 net MW of natural gas-fired generation facilities [4]

Core Insights - Quanta Services, Inc. (PWR) has shown strong earnings momentum with a 22.4% increase in earnings per share (EPS) in Q3 2025, following year-over-year growth of 30.5% and 26.2% in Q1 and Q2 respectively, supported by a record backlog of $39.2 billion [1][10] Financial Performance - The company anticipates adjusted EPS for 2025 to be between $10.33 and $10.83, with guidance for continued double-digit EPS growth in 2026, driven by backlog momentum and favorable market trends [4] - Quanta's earnings estimate for 2026 has increased by 2% year-over-year, with projected revenue growth of 11.6% [16] Business Segments - The Electric Infrastructure Solutions segment is the main growth driver, benefiting from increased investments in grid modernization, power generation, renewable energy, and data-center infrastructure [2] - The launch of the Total Solutions power generation platform enhances market reach and customer relationships, reducing execution risk and supporting margin stability [3] Competitive Landscape - Compared to MYR Group and MasTec, Quanta's diversified model and record backlog provide stronger visibility for sustained double-digit EPS growth [6][8] - MYR Group, while benefiting from utility programs, faces earnings volatility due to its narrower scale and project timing [7] - MasTec has significant exposure to renewables and infrastructure spending but experiences more sensitivity to execution risks [8] Market Performance - Quanta's shares have increased by 14.9% over the past six months, outperforming the Zacks Engineering - R and D Services industry's growth of 2.9% [11] - Quanta trades at a forward price-to-earnings ratio of 35.56X, higher than the industry average of 23.89X [14]