U.S. industrials draw AI-driven investor interest as infrastructure buildout broadens

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AI-driven industrials attract investors

Highlights

Industrials attract renewed investor inflows as AI-driven demand for data centers, power systems, and infrastructure boosts sector momentum, particularly within the XLI ETF.
XLI trades at $180.50 and is approaching key resistance near $187, with technical setups suggesting potential outperformance versus the S&P 500 if a breakout occurs.
Sterling Infrastructure's backlog surged 131% year over year to $5.15 billion for Q1 2026, and full-year EPS guidance increased nearly 35% after a strong earnings report.

Industrial sector gains momentum from AI infrastructure demand

As reported by CNBC, Todd Gordon of Inside Edge Capital says the industrial sector is increasingly benefiting from the AI growth trade as investors look for companies exposed to data centers, power systems and other physical infrastructure needed for the technology buildout.

He argues that industrials, traditionally treated as a value-oriented and cyclical group, are now attracting fresh attention as Wall Street reassesses how essential heavy industry is to the next phase of AI investment. Aerospace and defense make up 27.24% of the sector’s heaviest industry component, while higher defense spending is also adding support to the Industrials ETF, XLI.

On Gordon’s reading of the weekly chart, XLI is rallying toward a key resistance level near $187 after a 126% move from March 2020 to November 2021 and a subsequent 2022 pullback. With the fund last trading at $180.50, a break above $187 would, in his view, strengthen the bullish case and open the way for a move into the $200 range.

He also points to a cup-and-handle breakout pattern on the daily chart and says the XLI-to-SPY ratio is approaching a breakout of its own. That relative-strength setup suggests industrial stocks could rise faster than the S&P 500, creating a possible source of benchmark outperformance for portfolio managers.

Bloom Energy and Sterling Infrastructure stand out

Gordon says he screened for U.S.-based industrial companies with market capitalizations above $1 billion, expected one-year forward EPS growth above 20%, two-year analyst EPS revisions above 20%, expected one-year forward revenue growth above 20% and two-year revenue revisions above 20%. He highlights Bloom Energy and Sterling Infrastructure as names that fit the theme.

He says Bloom Energy remains a favored holding because its on-site solid oxide fuel systems help data centers address long delays in securing grid connections. Gordon notes that he recently increased his position in Bloom by 50%, and says the stock is attempting a third breakout from consolidation as long as support at its 50-day moving average of $255 holds.

For Sterling Infrastructure, Gordon says the company offers direct exposure to the physical groundwork of the AI economy through projects including data center sites, semiconductor fabrication campuses and power generation facilities. He says Sterling’s combined backlog rises 131% year over year to $5.15 billion as of the first quarter of 2026, while full-year EPS guidance is raised by nearly 35% after its latest earnings beat, making the stock a focused play on AI-related infrastructure spending.

In our earlier article on General Motors partnering with Lockheed Martin, we covered how the two companies are working to scale U.S. munitions-related production and strengthen supply chains as defense demand rises. The agreement, supported by the Department of Defense, underscores how large industrial players are being pulled into higher-rate manufacturing and capacity expansion—an industrial tailwind that also complements today’s renewed investor focus on the sector.

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