What happened on May 7

The second-tier datacenter buildout cohort repriced sharply and simultaneously as Q1/fiscal Q4 2026 earnings hit. AAON reported Q1 2026 revenue of $496.9M — a 54.3% YoY surge that crushed the $381M consensus — with its BASX data-center cooling brand growing 72.4% to $228.6M and total backlog up 107% to $2.13B, its sixth consecutive quarterly record. AAON then raised full-year 2026 revenue guidance to 40–45% growth (from a prior 18–20% guide), implying roughly $1B in BASX revenue for the year. The stock moved from ~$98 pre-earnings to ~$148 at the close, a ~50% single-session jump, and stands ~72% above its April 6 low of $81.25.

Flex posted fiscal Q4 2026 revenue of $7.48B (+16.9% YoY) and confirmed its data center business is growing at least 35% annually, representing approximately $6.5B in revenue — roughly 25% of the total company. Flex also disclosed a new partnership with Amazon Web Services and a collaboration with NVIDIA on next-generation 800V DC AI factory infrastructure, alongside power manufacturing expansions in Dallas, Poland, Fontana (California), and Colombia. The stock surged from $96.45 to $134.73 on the earnings release and reached $142.17 by May 8, up ~110% from its April 6 low of $67.70.

Fluence Energy (FLNC) disclosed two Master Supply Agreements with major hyperscalers for data center energy storage — selected from 26 competing vendors — plus a 12-gigawatt-hour hyperscaler-specific pipeline and a record $5.6B total backlog as of March 31, 2026, with order intake doubling year-to-date. FLNC surged ~78% in two sessions following the announcements, now up ~98% from its 35-day low.

Datadog crossed $1B in quarterly revenue for the first time ($1.006B, +32% YoY) and raised FY2026 guidance to $4.3–4.34B. The company disclosed 8-figure annualized deals with AI research divisions of two of the world's largest technology companies for GPU monitoring on hyperscale training workloads, signaling expansion into training observability. DDOG cleared $200 by May 8, up ~90% from its 35-day low.

The macro anchor: $725B in hyperscaler capex

Q1 2026 hyperscaler earnings confirmed combined Big-5 capex of approximately $725B for 2026 — up ~64% YoY, with Alphabet raising to $180–190B, Meta to $125–145B, Microsoft guiding to ~$190B, and Amazon reaffirming $200B. Critically, all four hyperscalers characterized conditions as supply-constrained rather than demand-constrained: Microsoft confirmed Azure AI at a $37B annual run-rate (+123% YoY), Google Cloud's backlog exceeded $460B, and AWS grew 28% — its fastest pace in 15 quarters. The supply-constrained framing is the single most important macro variable for the second-tier names: it means backlogs should convert, not evaporate.

Valuation dispersion within the cohort

Post-surge, valuations have diverged sharply and the runway question is no longer uniform across the four names.

FLEX remains the most attractively valued on a risk-adjusted basis. Its trailing EV/EBITDA of 28.4x and forward P/E of 35.5x sit well below the Tier-1 comp set, and the company has sustained 6%+ operating margins for four consecutive quarters with strong free cash flow conversion. At roughly $6.5B in data center revenue growing 35%+, the datacenter segment alone is approaching the size of many pure-play peers — yet FLEX still carries the multiple of a diversified contract manufacturer.

AAON trades at 46.3x trailing EV/EBITDA and 89.5x trailing P/E (forward P/E ~65.6x). Vertiv (VRT), the Tier-1 thermal management peer, trades at ~52x trailing EV/EBITDA and ~45x forward P/E after raising its FY2026 guidance to $13.5–14.0B in net sales, with a backlog exceeding $15B. AAON's relative discount to VRT on trailing EV/EBITDA (~46x vs. ~52x) is narrowing, but AAON's 40–45% revenue guide compares favorably to VRT's 34%. The key variable is gross margin recovery: AAON margins compressed from 33% (FY2024) to 25.1% in Q1 2026, with management attributing the gap to outsourcing costs, Memphis ramp inefficiencies, and tariffs — all characterized as transitory and already addressed in backlog pricing. Management's stated facility revenue potential exceeds $2B with the heavy Memphis capex phase largely complete, implying a path to operating leverage.

FLNC is pre-profitability (FY2026 EBITDA guided to just $40–60M on $3.2–3.6B revenue), making traditional multiple comparisons less meaningful. The investment thesis here is option-like: two confirmed hyperscaler MSAs, a $5.6B backlog, a $12B data-center-specific pipeline, and Fluence's specific technical differentiation — sub-10ms power response for AI datacenter load fluctuations, derived from European grid markets — at a market cap that remains small relative to the pipeline. The stock has already moved ~98% from its low, and margin execution will determine whether the MSA wins translate to durable earnings power.

DDOG is the most extended at 386x trailing EV/EBITDA and 86x forward P/E. The premium reflects 79%+ gross margins, 32% revenue acceleration, and structural positioning as the observability standard for AI-era cloud and training workloads. New logo ARR more than doubled YoY in Q1, setting an all-time record. The valuation leaves little room for execution variance.

Context from Tier-1 peers

The second-tier cohort's moves look less extreme against the Tier-1 backdrop. Sterling Infrastructure (STRL) reported Q1 2026 revenue up 92% with E-Infrastructure margins of 25% and raised its 2026 guide to >50% revenue growth; the stock rose ~115% from its 35-day low to ~$844 and now trades at ~79x P/E. Quanta Services (PWR) surged from $554 (35d low) to a $785 peak on a record $48.5B backlog and 1.5x book-to-bill, pulling back to ~$745 with a forward P/E of ~57x. By those standards, FLEX's 35.5x forward P/E and AAON's 65.6x forward P/E represent the more moderate end of the cohort spectrum.

What the runway looks like from here

The earnings prints resolved the primary uncertainty — demand is real and accelerating — but introduced a new set of variables: margin recovery timelines at AAON, conversion of multi-billion backlogs at FLNC, tariff and supply-chain execution at FLEX, and DDOG's ability to sustain 30%+ growth against increasingly difficult year-over-year comparisons. The supply-constrained hyperscaler posture argues that backlog conversion risk is lower than in a demand-constrained cycle. But the second-tier names are no longer operating in valuation obscurity — each has now been discovered, priced, and partially re-rated toward its Tier-1 peers. The question of remaining runway is primarily an execution question, not a demand question.