Industrial stocks rise on AI infrastructure spending

Industrials in the S&P 500 are trading at unusually high valuations as investors focus on the companies helping build out AI infrastructure. The sector’s pricetoearnings ratio is above 30, well above its longterm average near 20, according to market analysts cited in the report. The article says the AI data center buildout is driving demand for equipment, power systems, construction machinery, substations, fiber networks, and backup technology. That has helped companies such as Caterpillar, GE Vernova, Emerson Electric, and Hubbell post strong share gains over the past year or two. The trend is also showing up in exchangetraded funds. Industrialfocused ETFs have seen billions of dollars in net inflows this year, while defenserelated holdings have benefited from higher military spending and investor interest in aerospace and defense. Analysts quoted in the piece said the longterm outlook depends on continued infrastructure investment and related demand.