TRG | The Bottom Line – 11/7

If there is a consistent theme around Q3’25 earnings season, one remains dominant: Data centers. With the convergence of two massive secular themes – the reindustrialization of the U.S. and AI/data center build out – TRG contends both will drive industrial and construction demand for many years, if not decades. As we have heard throughout Q3’25 earnings season, demand is coming in a variety of industries. APi Group (APG) in its Q3’25 earnings release and earnings conference call noted strong growth from large-scale data centers, semiconductor manufacturing, and re-industrialization projects. Due to their complexity, high demand for fire safety services, and national footprint, data centers are expected to grow from 7–8% of APG’s total sales to around 9–10%. Ferguson (FERG) sees data centers, manufacturing, life sciences, and water infrastructure projects as major nonresidential growth engines, driven by onshoring trends and large-scale industrial investment. This is beneficial to opportunities in piping, valves, automation, and fabrication. Services and distribution business models will benefit from the AI build out not only on the front end but also going forward with the ongoing sustained maintenance of these highly complex facilities. Heavy materials producers will be big winners in the buildout, and scale matters against this backdrop. Martin Marietta Materials (MLM) in its earnings call highlighted data center construction, LNG energy infrastructure, and advanced/pharmaceutical manufacturing as major drivers of heavy non-residential aggregates demand, especially across Texas and the Gulf Coast, supported by strong infrastructure funding and reshoring trends that are fueling long-term growth in its core materials business. Heavy materials producer CRH also benefits not only from heavy materials consumption but also complex water infrastructure solutions. Pulling the string further, there are additional unlikely companies that benefit, ranging from equipment rental (build out and ongoing demand) to building products (companies such as Owens Corning (OC) that provide insulation to roofing systems). Stay tuned for a deeper TRG dive on unlikely winners in the data center and reindustrialization buildout in coming weeks. #trgbuildingideas