Dycom Industries, Inc. (DY) is making a massive bet that the data center boom is real and lasting. The infrastructure services company reported record third-quarter earnings, raised its outlook for the year, and dropped news of a nearly $2 billion acquisition that immediately sent shares soaring.

Record Quarter Across the Board

The numbers tell a growth story. Contract revenues climbed 14.1% year over year to $1.45 billion, topping analyst estimates of $1.41 billion. Organic revenue grew 7.2%, while revenues from acquired businesses jumped to $110.9 million from just $21.0 million in the same quarter last year.

Adjusted EBITDA rose 28.5% to $219.4 million, representing 15.1% of contract revenues. Earnings per share hit $3.63 on an adjusted basis, crushing the $3.20 consensus estimate. Operating cash flow for the quarter reached $220 million, and the company closed with a robust backlog of $8.2 billion and cash and equivalents of $110.1 million.

Why the Optimism?

CEO Dan Peyovich didn't mince words about what's driving the business. "The demand drivers for telecommunications and digital infrastructure have never been stronger, fueled by accelerating fiber builds, a massive ramp-up in data center needs, and the much anticipated arrival of BEAD," he said.

BEAD refers to the federal Broadband Equity, Access, and Deployment program, which is pumping billions into internet infrastructure. Combined with the insatiable appetite for data centers to support AI and cloud computing, Dycom sees a multiyear tailwind.

Guidance Gets a Lift

For the fourth quarter, Dycom expects adjusted earnings per share between $1.62 and $1.97, above the $1.59 consensus, with revenues ranging from $1.26 billion to $1.34 billion compared to the $1.293 billion estimate.

The company also raised its fiscal 2026 revenue guidance to a range of $5.35 billion to $5.425 billion, up from the prior range of $5.29 billion to $5.425 billion and ahead of the $5.348 billion consensus. That translates to expected growth of 13.8% to 15.4% for the full year.

The Big Move: Power Solutions

Here's where things get interesting. Dycom announced it's acquiring Power Solutions for $1.95 billion in a deal expected to close before the end of the fiscal year, subject to standard closing conditions.

Power Solutions is an electrical contractor based in the Mid-Atlantic region that specializes in building and maintaining electrical systems for data centers, hospitals, laboratories, telecom facilities, and government and military installations. The company is projected to generate around $1.0 billion in revenue for 2025.

The acquisition is expected to immediately boost Dycom's adjusted EBITDA margin and adjusted earnings per share, excluding non-cash intangible asset amortization, while also enhancing free cash flow for the combined entity.

Peyovich framed the deal as a strategic pairing. "Our customers will benefit from our expanded capabilities to support data center development by combining Dycom's expertise in fiber and Power Solutions' leadership in electrical, two of the most critical elements in digital infrastructure," he explained.

It's a straightforward thesis: data centers need both fiber connectivity and massive electrical infrastructure, and now Dycom can offer both under one roof. If the data center buildout continues at its current pace, this could be a well-timed expansion.

Price Action: DY shares were trading higher by 15.33% to $341.60 at last check Wednesday.