The explosive growth of artificial intelligence (AI) data centers in the U.S. is significantly increasing demand for cement.
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According to the American Cement Association, demand for cement is expected to rise by nearly one million metric tons over current levels within the next three years. Data centers across the U.S. are projected to consume about 247,000 metric tons of cement in 2025, and 860,000 metric tons over the next three years, said the association in a new report.
The increased need for cement is good news for the stocks of major construction companies such as Eagle Materials (EXP), Martin Marietta (MLM), and Vulcan Materials Co. (VMC). The American Cement Association says there were 5,426 operational AI data centers in the U.S. at the end of March this year. That number is projected to surpass 6,000 by 2027, driving the need for more cement and concrete.
Tech Companies
The demand growth comes as leading technology companies such as Amazon (AMZN), Microsoft (MSFT), and Meta Platforms (META) race to build and power AI data centers. Technology companies currently account for about 25% of all new data center projects in the U.S., according to market information.
Despite the projected growth, challenges to meeting the cement demand loom. These include regulatory hurdles and labor shortages that could hinder construction, says the association. Additionally, data centers are projected to increase their share of national electricity consumption from 4.4% in 2023 to 12% by 2028. Tech companies such as Microsoft are turning to nuclear power to meet their electricity needs.
The stock of Eagle Materials, a leading American cement and concrete supplier, has declined 18% this year.
Is EXP Stock a Buy?
The stock of Eagle Materials has a consensus Moderate Buy rating among eight Wall Street firms. That rating is based on three Buy and five Hold recommendations assigned in the last three months. The average EXP price target of $238.57 implies 17.79% upside from current levels.
