Babcock & Wilcox (BW) Stock Rockets 23% on AI Data Center Power Deals and Strong Q1 Results

NEW YORK — Shares of Babcock & Wilcox Enterprises Inc. (NYSE: BW) surged more than 23% in morning trading Monday to $17.95, extending a remarkable rally as investors rewarded the industrial company’s growing role in powering artificial intelligence data centers and its strong first-quarter performance.

The move comes one day after the company reported first-quarter 2026 results that showed significant backlog growth, new contract wins, and raised full-year guidance, reinforcing its transformation into a key player in the energy infrastructure needed for hyperscale AI facilities.

Q1 earnings beat expectations

Babcock & Wilcox reported first-quarter revenue of $214.4 million, up 44% year-over-year, with adjusted EBITDA of $16.1 million — a 296% increase. The company highlighted a massive $2.4 billion power generation project for AI data centers and more than $21 million in new fuel-switching technology awards.

Management raised its 2026 adjusted EBITDA guidance to $80–$100 million, citing strong demand for behind-the-meter power solutions tailored to AI factory campuses. The company’s backlog reached $2.7 billion, while its total pipeline exceeded $14 billion.

Major AI power project drives momentum

The biggest catalyst remains Babcock & Wilcox’s $2.4 billion design-build contract with Base Electron to supply 1.2 gigawatts of natural gas-fired power generation capacity for Applied Digital’s AI data centers. The project includes four 300-MW boiler and steam turbine systems, with potential for an additional 1.2 GW.

This positions the century-old boiler and power plant specialist at the center of the AI energy boom, where massive computing clusters require reliable, high-capacity power sources that the strained electrical grid often cannot provide quickly enough.

Analyst and market reaction

Several Wall Street firms have raised price targets on BW in recent weeks, with some bullish voices now calling for $25 or higher. The stock has delivered extraordinary returns, up more than 4,400% over the past year from deeply depressed levels, though it remains volatile.

Monday’s surge came on elevated volume, with traders rotating into industrial names tied to AI infrastructure. Despite the massive run-up, some analysts argue the valuation still offers upside if the company successfully executes on its expanding backlog.

Company transformation story

Babcock & Wilcox has undergone a significant strategic shift, moving from traditional boiler services toward high-growth areas including renewable energy, fuel switching, and now large-scale power generation for data centers. The company has completed more than 150 boiler conversions and continues winning new fuel-switching awards amid baseload power demand.

CEO Kenneth Young has emphasized the company’s ability to deliver turnkey solutions for the energy transition while capitalizing on AI-driven electricity needs. The firm’s parts and services segment also continues performing strongly.

Risks and legal overhang

The rapid rise has not been without controversy. Class action lawsuits allege misleading statements regarding the $2.4 billion contract and potential conflicts of interest. Investors with losses between November 2025 and March 2026 have until June 15 to seek lead plaintiff status.

Like many small-cap industrial names, BW remains sensitive to execution risks, project delays, and broader economic conditions. However, current momentum appears driven by tangible contract wins and improving financial metrics.

Broader AI infrastructure theme

Babcock & Wilcox joins a growing list of companies benefiting from the enormous power requirements of AI training and inference. Data centers are projected to consume a dramatically larger share of U.S. electricity in coming years, creating opportunities for companies capable of delivering reliable generation capacity quickly.

What investors should watch

Key upcoming catalysts include progress updates on the $2.4 billion project, additional contract wins, and the Q2 earnings report. Continued strength in the parts and services business and successful execution on fuel-switching projects will also be closely monitored.

Monday’s sharp gain reflects growing Wall Street conviction that Babcock & Wilcox is well-positioned in one of the decade’s most powerful secular trends. While volatility remains high, the company’s pivot toward AI power infrastructure has clearly captured investor imagination.

As trading continues, BW stands out as one of the more compelling industrial turnaround stories of 2026 — a legacy power equipment maker reborn as an essential player in the artificial intelligence revolution.