Three contractors reported record quarters this summer for the same unglamorous job: getting power, water and cooling into a shell building before a hyperscaler can switch on its chips. The results were emphatic. The reaction, four weeks later, was a synchronized selloff none of them announced anything to deserve.

What the money is paid for

EMCOR Group, a 44,000-person mechanical and electrical contractor that installs power distribution, piping, ventilation and low-voltage cabling in data centers, hospitals and industrial plants, posted June-quarter revenue of $5.15bn, up 19.8% and almost entirely organic. Operating income rose faster, up 31.8%. Remaining performance obligations — signed work not yet performed — hit a record $17.14bn, a 44% increase, led by the network-and-communications category that carries data centers. Management raised full-year earnings guidance about 10% at the midpoint.

Inside that result is a split worth more than the headline. EMCOR's electrical construction margin expanded 210 basis points to 13.9% on 24% revenue growth. Mechanical construction grew faster, at 31%, and lost 110 basis points, to 12.5%. The reason is contract form: roughly a tenth of mechanical work has shifted to guaranteed-maximum-price and construction-manager arrangements, where the contractor procures chillers and switchgear on the owner's behalf and marks them up thinly. Revenue earned on passed-through equipment is not the same business as revenue earned on scarce electricians. Electrical work accounts for 45-70% of data-center construction cost, and cost per megawatt has climbed from $7.7m in 2020 to $10.7m in 2025 — labor scarcity is the binding constraint, and it is the part of the job that prices.

The concentrated one

Comfort Systems USA does the same installation work plus off-site modular assembly of complete data-center plant rooms. Revenue grew 50.3% to $3.27bn, with same-store growth of 44%, and backlog reached a record $14.1bn, up 73%. Gross margin expanded 242 basis points to 25.9%. Technology work reached 58% of first-half revenue, from 40% a year earlier: the mix is concentrating, not diversifying. Management sells directly to two large hyperscalers, books $510m of modular orders in a quarter, and is allocating all new modular capacity to existing customers.

Two qualifiers travel with that margin. The quarter included $7.7m of favorable estimate revisions, double the prior year, after $43m of change-order gains in March that management told investors to exclude from the baseline. And second-half same-store growth was guided to the high-20s or low-30s, against 44% in the June quarter. Free cash flow of $999m was roughly 2.5x earnings, about a third of it advance cash on bookings — customers pre-funding the backlog, a benefit that reverses if orders pause.

The control case

IES Holdings, a smaller electrical and technology installer whose Communications segment builds network infrastructure inside data centers, is the test of whether this demand reaches past the two large caps. It does: revenue rose 39.6% to $1.24bn, accelerating from 16.8% growth in March, operating income rose 59.6%, and backlog reached $4.5bn, up 91% since September. Communications revenue grew 51%. Its 27.4% gross margin is the highest of the three. Its consensus forecast rests on a single analyst, so forward estimates carry little information; a two-for-one split goes ex on 24 August.

What the twelve months were made of

EMCOR's shares rose 27.3% over the year while trailing earnings per share went from $24.10 to $32.01 — a 32.8% gain. The multiple contracted, from about 25.3x to 24.3x. Comfort Systems rose 140%, and while earnings covered most of that on a price-to-earnings basis, gross profit grew 66.7%, lifting price per dollar of gross profit from 14.1x to 20.2x. IES rose 100.8% on 27% gross-profit growth: 8.5x to 13.2x. Because gross margins differ — 19.8%, 25.9%, 27.4% — that ratio is the cleaner comparison across three firms selling essentially the same physical work.

All three have de-rated since May, when EMCOR traded at 31.4x trailing earnings and Comfort Systems at 56.8x. Forward, EMCOR is 23.6x against consensus 2027 revenue growth of 10.9%; Comfort Systems is 33.8x against 20.2%, roughly half its 2026 rate.

Four sessions

From 17 to 21 August the group gave back a month: EMCOR fell 9.5%, Comfort Systems 11.2%, IES 12.5%, and neighbors including Sterling Infrastructure and Dycom fell with them. No company disclosed anything. On 18 August the 30-year Treasury yield topped 5.33%, a 19-year high, and Pennsylvania removed data centers from its permit fast-track program, conditioning a sales-tax exemption on grid commitments — a schedule penalty, not a ban. The rates channel runs through customers: hyperscalers had issued nearly $223bn of bonds by 20 August, more than double all of 2025. Meanwhile only about a third of the capacity announced for 2026 completion has broken ground. None of the three has disclosed a deferral.

The setup

Where it stands — Records at all three, multiples compressing since May, and a four-day August drawdown driven by long rates rather than any disclosed order change.

Would confirm — Comfort Systems' September-quarter backlog rises again in dollars and gross margin holds above 25% without one-off estimate revisions.

Would invalidate — Any of the three reports sequentially lower backlog, or discloses a data-center project deferral or cancellation.

Watch next — EMCOR's third-quarter report in late October, the first read on whether 44% backlog growth converts at rising electrical margin.

Valuation — EMCOR 24.3x trailing and 23.6x forward earnings, 9.4x gross profit; Comfort Systems 40.7x, 33.8x and 20.2x; IES 30.0x and 13.2x.