The Russell 2000 index is reaching record highs driven by AI-related stocks rather than regional banks, which historically led small-cap rallies. Technology and industrial stocks account for over 70% of the index's year-to-date gains, with semiconductor, optical equipment, and data-center infrastructure companies surging. The AI trade has moved downstream to suppliers and builders supporting data-center buildout.

Large-cap stocks in software, electric vehicles, data centers, and healthcare faced significant pressure last week due to weak guidance, regulatory concerns, rising bond yields, and competitive risks. Technology and China-linked companies led the declines, with ten major stocks experiencing notable losses ranging from 4.96% to 18.28%.

As AI demand drives data center expansion, three infrastructure companies are capitalizing on the need for electrical systems, power grid connections, and cooling solutions. Sterling Infrastructure, Quanta Services, and Comfort Systems USA are benefiting from massive backlogs and strong earnings beats, with electricity consumption expected to grow 1.6% annually over the next 25 years.

Wall Street's momentum trade accelerated last week as earnings beats and AI-fueled optimism drove massive rallies across tech and infrastructure stocks. Ten large-cap stocks emerged as top performers, with gains ranging from 32% to 57%, driven by better-than-expected earnings, raised guidance, and major partnerships in cloud computing, semiconductors, and space technology.

Sterling Infrastructure (NASDAQ: STRL) reported strong Q1 2026 results with revenue of $825.7 million (up 92% YoY) and adjusted EPS of $3.59, significantly exceeding analyst expectations. The company raised its full-year 2026 guidance to $18.40-$19.05 EPS and $3.7-$3.8 billion revenue. The CEC acquisition contributed substantially to growth, and backlog reached $5.15 billion. Shares surged 29.46% in premarket trading to a new 52-week high.

The article identifies three growth stocks positioned for long-term outperformance: Sterling Infrastructure, benefiting from AI infrastructure buildout with 51% YoY revenue growth; AeroVironment, a drone maker gaining military contracts amid geopolitical tensions; and Vertiv, a liquid cooling solutions provider with strong ties to Nvidia and 80% revenue from AI infrastructure.

As AI-driven data center buildouts accelerate, power and real estate have become critical bottlenecks rather than computing capacity. Major tech companies are securing their own energy sources through nuclear power deals and renewable energy partnerships. Investors can gain exposure through direct data center operators, REITs, and ancillary 'picks and shovels' companies providing infrastructure, cooling, electrical systems, and engineering services.

Investment firm Informed Momentum initiated a new position in Rambus by purchasing 89,201 shares worth $9.14 million in Q3 2025, making it the fund's fifth-largest holding. The move reflects bullish sentiment on Rambus's semiconductor products, which are in high demand for AI applications. However, the stock's elevated P/E ratio of 46 suggests investors should wait for a better entry point.

Lisanti Capital Growth, LLC acquired 98,156 shares of The Bancorp, valued at $7.35 million, signaling investor interest in the fintech-focused bank that provides digital banking and payment infrastructure for platforms like Chime.

AECOM has been selected to provide design services for Southern Water's $4.8 billion capital delivery program, which aims to improve water and wastewater infrastructure in the UK. This collaboration positions AECOM as a vital partner in delivering these ambitious upgrades.

The article highlights 4 stocks with strong interest coverage ratios, indicating their ability to meet interest obligations. The stocks are Sterling Infrastructure, H&R Block, Leidos Holdings, and Stride.

Sterling Infrastructure reported strong second-quarter earnings, surpassing expectations and raising guidance. The company was able to capitalize on the fastest-growing and higher-margin segments of its business, such as e-infrastructure solutions and transportation, despite challenges in other parts of its operations.