Argan shares surge 155% as AI power demand swells backlog
Argan shares surged 155% in the first half of 2026 as a nearly tripled construction backlog signaled sustained power demand from AI data centers.
Argan shares gained 154.9% in the first half of 2026, according to S&P Global Market Intelligence, as surging demand for electricity from AI data centers transformed the engineering contractor's order book. The stock's rally reflects a fundamental shift in the company's growth trajectory, driven primarily by planned hyperscaler capital expenditures.
The most tangible evidence of this shift is Argan's backlog, which now stands at $2.8 billion. To put that figure in perspective, the company generated just $945 million in revenue during fiscal 2026. A backlog nearly three times annual sales gives the firm exceptional near-term earnings visibility. This buildup has helped quiet early 2026 market concerns that the artificial intelligence and broader electrification trades were speculative bubbles.
Argan operates as an engineering, procurement, and construction (EPC) services provider. Its power segment accounted for 80% of fiscal 2026 revenue, with industrial and teledata making up the remaining 18% and 2%, respectively. The company's power clients include electric utilities, power producers, and heavy commercial users requiring significant on-site generation capacity.
While data centers are the marginal driver of the current backlog expansion, the underlying demand is broader. Argan also secures contracts related to electric vehicle charging networks, building electrification, and the replacement of aging grid infrastructure. This diversification within the power sector reduces reliance on a single end market.
Managing the Boom
The primary risk for EPC firms during periods of rapid order growth is overextension. History shows that contractors frequently damage their balance sheets by accepting unsuitable projects with questionable margins simply to maintain top-line momentum. Investors are closely watching how Argan manages its current windfall.
On the most recent earnings call, CEO David Watson moved to reassure the market. "As I discussed on our last call, we expect to add a handful of new projects over the next 10 to 18 months," Watson said. He emphasized maintaining a "disciplined approach" to project selection.
This language signals that management intends to protect profitability rather than chase revenue growth at any cost. For a company suddenly flush with opportunities, that discipline is arguably as important to long-term shareholders as the AI-driven demand itself.
