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3 Non-Tech Stocks Still Winning Big on AI
Submitted by Nathan Reiff. Originally Published: 7/13/2026.
Key Points
- Investors seeking AI exposure without direct tech-sector risk can consider Powell Industries, AAON, and EMCOR Group, all benefiting from data center demand.
- Powell Industries and AAON have posted strong backlog growth and revenue gains, but their share prices have already risen sharply, raising valuation concerns.
- EMCOR Group shows steady revenue and earnings growth with a more modest year-to-date gain, and analysts see further upside potential ahead.
- Special Report: Forget SpaceX. Buy the company Musk can't replace.
The AI-driven tech boom continues, but for investors worried about becoming too concentrated, it can be difficult to avoid some of the biggest names in technology. Even those seeking overlooked tech investment targets may want broader diversification into other sectors. After all, energy, industrials, and other parts of the market are also performing quite well.
It is absolutely possible to build exposure to AI trends without leaning too heavily on tech names. Companies that provide data center services and equipment, including construction work, have been thriving despite not being part of the tech sector. The firms below all have the potential to continue benefiting as AI demand remains strong, without adding direct exposure to tech.
Massive Demand Increase for Powell, But Valuation May Be a Concern
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Click here to get Jason Bodner's top pick for freePowell Industries Inc. (NASDAQ: POWL) designs and builds customized power control and distribution products, along with a range of automation, metering, and data acquisition systems. While the company has traditionally served customers in the energy, mining, and utilities sectors, it has increasingly focused on data center clients.
Business appears to be accelerating, based on two significant projects the company won in Q2 2026, each worth more than $75 million, and a post-quarter data center award exceeding $400 million.
This should help drive revenue growth going forward—the firm's $297 million in Q2 revenue was solid, but it was up only about 6% year over year (YOY), leaving plenty of room for improvement.
Gross margin declined modestly on a YOY basis, but backlog remains massive at $1.8 billion, up 33% YOY. The $490 million in new orders received last quarter highlights just how strong demand is for Powell's products, and the company is expanding capacity in a sustainable, self-funded way that has not yet required dilution for shareholders.
The question for investors may be whether the recent rally in POWL shares has room to continue—the stock has already returned about 120% year to date (YTD), and with a price-to-earnings (P/E) ratio of 45, it is hardly cheap. Analysts still favor it overall, though, with four Buys and three Hold ratings.
A Fast-Growing HVAC Firm Works to Build Capacity and Improve Margins
Cooling is a major engineering challenge for data centers, which must maintain appropriate temperatures to avoid hardware malfunctions. Industrial HVAC firms like AAON Inc. (NASDAQ: AAON) have become a pivotal part of the data center industry as a result.
AAON's recent financials show how important it has become to data center builders and operators: in Q1 2026, the company reported record quarterly net sales of nearly $497 million, up 54% YOY, as well as a backlog of $2.1 billion. That is more than double the backlog from just one year earlier, underscoring the momentum in data center demand for HVAC products and services.
As a result, AAON has updated its full-year outlook for 2026 and now expects sales growth of about 40% to 45%. Gross margin was a bit less stable in the early part of the year—it fell by 170 basis points YOY to 25.1%—but management sees it improving to a range of 27% to 28% by the end of 2026 as AAON works to build internal capacity. In the meantime, capital expenditures (CapEx) will remain high, after about $53 million in Q1 alone.
Like Powell, AAON has risen rapidly this year, climbing about 48% YTD. Analysts still see it as a Buy, however, with four Buy ratings and two Holds, despite minimal upside potential.
Steady Growth From EMCOR, With Room Left to Run
While both companies above specialize in products or services vital to data center upkeep, EMCOR Group Inc. (NYSE: EME) is a broader electrical and mechanical contractor involved in data center construction. Its services range from HVAC to electrical installation, fire protection, automation, and more.
The company has been able to meet rising demand for its services—it experienced almost 20% YOY revenue growth to $4.63 billion for the first quarter of the year—while maintaining operating income of $404 million and improving diluted earnings per share (EPS) by about 30% YOY as well.
Even as its mechanical construction margins have become somewhat compressed, with operating margin falling to 10.9% from 11.9% a year earlier, this is likely due more to ongoing variability and pass-through work than to an inability to scale.
EMCOR heads into the second half of the year with strong performance and an optimistic outlook from management, which sees full-year revenues reaching an impressive $18.5 billion to $19.3 billion alongside EPS ranging from $28.25 to $29.75.
Shares of EME are up 27% YTD, a more modest gain than the other companies on this list, and still have another 12% in upside potential according to analysts. Nine Buy ratings and two Holds suggest that Wall Street remains optimistic about EMCOR's ability to navigate a high-demand environment going forward.
GE Aerospace Faces a Prove-It Moment in Q2 Earnings
Submitted by Chris Markoch. Originally Published: 7/17/2026.
Key Points
- GE Aerospace shares fell about 5% after Q2 2026 earnings despite strong revenue and EPS beats, as investors focused on the stock's roughly 46x forward earnings valuation.
- The company raised its full-year 2026 guidance across revenue, adjusted EPS, operating profit, and free cash flow, citing robust demand from aging airline fleets and defense customers.
- GE's backlog exceeded $210 billion, and strong free cash flow growth funded $2 billion in buybacks, supporting analyst price target increases and a consensus target of $365.61.
- Special Report: Forget SpaceX. Buy the company Musk can't replace.
GE Aerospace (NYSE: GE) is once again telling investors a familiar story after its Q2 2026 earnings report on July 16. The stock fell about 5% in early trading the day after the release, despite strong beats on both the top and bottom lines. The company also raised its full-year guidance.
That pattern of a strong earnings report followed by a stock-price decline has repeated after GE’s last two earnings releases.
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See the one company controlling the technology with no competition in sightThe reason is a familiar one: valuation. GE trades at around 46x forward earnings, which is a premium to the S&P 500.
It’s also expensive relative to its historical average. But that needs some context, because GE Aerospace has only existed since 2024, when General Electric spun off its energy and healthcare businesses into GE Vernova (NYSE: GEV) and GE Healthcare Technologies (NASDAQ: GEHC), respectively.
That means the “what have you done for me lately?” sentiment expressed by many investors may actually be an apt way to evaluate GE.
Aging Fleets Are Driving Growth
The headline earnings numbers were impressive. Revenue of $12.63 billion beat estimates of $11.87 billion and was more than 21% higher year over year (YOY). Earnings per share (EPS) of $2.02 beat the forecasted $1.86 and was also 21% higher YOY. Orders rose 17%, and free cash flow (FCF) jumped 43%.
Those numbers looked even stronger over the first half of 2026. Orders grew 49% YOY to $39.5 billion. Adjusted revenue for the half rose 27%, and FCF climbed 31% to $4.7 billion.
As impressive as the headline numbers were, there’s a reason GE Aerospace was willing to raise its full-year revenue and earnings outlook. The company is seeing strong demand from airline customers that need to maintain aging fleets.
Management’s commentary provided more specifics. Commercial services revenue grew 32% in the first half, and total engine deliveries rose 31%. GE credited its internal “FLIGHT DECK” lean operating program for cutting shop turnaround times by roughly a week since the end of 2025. That helped drive record internal shop visit output during the quarter.
Defense demand added a second growth engine. GE's Defense & Propulsion Technologies segment posted a 1.55x book-to-bill ratio for the first half, meaning new orders outpaced revenue by 55%. Revenue in that segment grew 17% for the half, with strong contributions from Avio Aero.
Backlog Still the Real Story
Making the results even stronger is the company’s reported backlog of more than $210 billion. That backlog gives GE unusual visibility into future revenue, since engine orders typically convert into decades of service revenue once delivered. New wins in the quarter included Copa Airlines selecting up to 120 LEAP-1B engines and a U.S. Air Force contract for an autonomous collaborative platform design review.
The Guidance Raise Was Sweeping
The expectation of continued strong demand was a catalyst for GE to raise its full-year 2026 guidance for revenue, earnings, operating profit, and FCF.
GE didn’t just nudge its 2026 outlook higher. It raised guidance across every major line item. Adjusted EPS guidance moved to $7.65–$7.85, up from a prior $7.10–$7.40 range. At the low end, that’s a 20% increase from the company’s full-year adjusted EPS in 2025.
Operating profit guidance climbed to $10.55–$10.75 billion, versus a prior $9.85–$10.25 billion. Free cash flow guidance rose to $8.9–$9.2 billion, and revenue growth guidance moved from “low double digits” to “high-teens.” Management credited robust services demand and equipment deliveries for the upgrade.
Is GE Overvalued?
At around 46x forward earnings, GE is trading at a premium to the S&P 500 and its own historical average. However, the company’s free cash flow (FCF) grew by more than 40% year over year in the quarter.
That cash generation is showing up in shareholder returns, too. GE repurchased $2 billion of stock in the second quarter alone, and diluted share count fell by 24 million shares year over year. The company also ended the quarter with $9.3 billion in cash, or $10.3 billion including short-term investments.
Skeptics will note that kind of FCF growth may not be sustainable, but it’s important to remember that the current iteration of the company has only been in existence since 2024. That means the five-year valuation models, whether FCF or EPS, are factoring in business units that no longer exist for GE Aerospace.
It’s possible that GE falls back a little more, but there’s likely to be a floor above a rising 50-day simple moving average. That means any dip may be short-lived, which is supported by analyst sentiment. The consensus price target for GE is $365.61, and since July, several analysts have raised their targets, with Jefferies offering the highest at $455.
Free cash flow also suggests that the dividend is safe and will likely grow again. Right now, that dividend is more of an afterthought, but it’s not an insignificant reason to make the stock a core holding.
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