A key requirement of the data centre infrastructure boom is energy. Argan Inc is an energy infrastructure specialist.
Argan is a leading service provider to the power industry with an unmatched range of offerings that include engineering, procurement, construction, project development, operations management and consulting services. We build innovative solutions for the power transition to low-carbon / zero-carbon fuels such as efficient gas-fired power plants, biomass projects, solar facilities, wind farms and waste-to-energy facilities.
They are perfectly placed to prosper.
This is being reflected in explosive growth in their backlog.
Solar power in action.
As CEO, David Watson, says, business is booming at Argan.
This is truly an exciting time for our company, and we are energized by the strong pipeline of opportunities we’re seeing. As we’ve noted on previous earnings calls, our power grid is under increasing strain. Rapid growth in AI and data centers, electrification of everything, the need to replace aging power facilities and years of underinvestment in power infrastructure are driving urgent demand for new, reliable power generation capacity.
The position could not be more extreme as demand explodes, but the existing infrastructure is ageing and increasingly not fit for purpose.
Much of the nation’s thermal power infrastructure is aging out, potentially constraining the supply of reliable, high-quality, 24/7 energy that’s necessary to run data centers, manufacturing facilities, and EV charging infrastructure. Only a handful of companies, including Argan, are capable of building the large, complex, combined cycle facilities necessary to power the electric economy. With our specialized capabilities, long-standing customer and vendor relationships, and proven track record of success, we are seeing heightened demand for our services. We remain dedicated to employing a disciplined approach to selecting the projects we believe are best suited to our capabilities, are a good fit within our existing portfolio of projects, and strengthen our ability to drive long-term growth and profitability.
Another share, a frequent past recommendation in Quentinvest, with an amazing chart, is Monolithic Power Systems.
Their products are at the heart of the energy revolution.
Monolithic Power Systems (MPS) designs and develops small, energy-efficient power management semiconductor solutions, focusing on integrating complex power electronics onto single chips. They provide DC-DC converters, power modules, motor drivers, and sensors for industrial, automotive, computing, and consumer markets.
Key Aspects of MPS’s Operations:
- Core Technology: MPS specializes in proprietary, highly integrated power management circuits (PMICs) that improve energy efficiency, reduce system size, and minimize heat output.
- Target Markets: Key growth areas include electric vehicles (EVs), cloud computing (data centers/AI), industrial automation, and consumer electronics.
- Key Products:
- Power Modules: Integrated inductor and power stage solutions.
- Motor Drivers & Sensors: For precision control in industrial and automotive apps.
- Lighting Control & AC/DC Converters: For industrial and consumer products.
- Business Model: MPS operates as a fabless semiconductor company, focusing on design and outsourcing production to specialized foundries.
- Competitive Advantage: Their monolithic process technology allows for high-density, high-efficiency, and compact designs.
MPS is known for enabling AI and electrification trends by optimizing power consumption.
What they are doing sounds exciting.
“Our results demonstrate our continued success in transforming from a chip-only, semiconductor supplier to a full service, silicon-based solutions provider,” said Michael Hsing, CEO and founder of MPS.
I think too much detail is a waste of time with MPWR. It has a great chart and all the fundamental boxes are ticked. It is a classic climb-aboard stock.
Another awesome chart. Comfort Systems (FIX) supplies the plumbers and electricians who are so much in demand as America rebuilds its energy infrastructure. Comfort Systems is a serial acquirer, which is a great way to drive accelerated growth in earnings per share. Owners capitalise on a lifetime of work. FIX picks up sales and qualified employees on attractive terms and makes a further gain by adding administrative efficiencies and taking out overheads.
The company is due to report tomorrow. This may lead to some share price turbulence, but is unlikely to impact the onwards and upwards story.
Share Recommendations
Argan Inc. AGX
Monolithic Power Systems. MPWR
Comfort Systems. FIX
Strategy – Hardware & Energy Stocks Good, Software Bad
ServiceNow shares fell nearly 18pc after what looked like strong results with just some niggles, mainly about business deals, because of the war in the Middle East. It may seem unjustified, and at $85, the shares are down from a January 2025 peak of $240, but there is an issue. ServiceNow is struggling to meet the numbers, and there is a cloud over its future as companies like Anthropic threaten to use AI to commoditise software.
In contrast, hardware and energy companies are reporting out-of-sight numbers as they struggle to cope with exploding demand. AI needs incredible infrastructure and lots of it to perform its miracles. One of those miracles is to eat the lunch of a whole raft of software businesses.
For a decade, between 2012 and 2022, software company Adobe Inc. ruled the world, but not any more. OpenAI launched its first version of ChatGPT in November 2022. Adobe shares peaked at almost $700 in that same month. The shares are $237.63, and the chart has looked increasingly threatening since early 2024.
I can see what is happening. We have been using a subscription service called iStock for images for years, but we have just failed to renew our subscription because Google’s Gemini can do what iStock does, and it is free and much better.
This is a brutal day of reckoning for many software companies, and a moment of historic opportunity for the companies creating the hardware and supplying the energy that feeds the AI revolution. It turns out that ChatGPT was one of the most incredible ‘black swan events’ ever to hit the US stock market.
