AECOM sees profit boost from data centers, defense spending

AECOM’s artificial intelligence investments are starting to show up on project wins.

The Dallas-based infrastructure firm said during its fiscal second-quarter earnings call Tuesday its proprietary AI tools helped secure two large contracts worth nearly $1 billion combined. One of those contracts closed after the quarter and has not yet entered its backlog.

“We were recently selected for a substantial recompete for a major energy client, where our proprietary AI solution was a central element of the project proposal and our competitive edge,” CEO Troy Rudd said during the call. “Notably, this contract includes specific mechanisms that allow us to capture value as we deploy AI to deliver greater value to our clients.”

Executives during the call said the technology is beginning to improve win rates on large pursuits and has boosted the firm to enter markets where it previously held less exposure, including healthcare design.

“What we are seeing is an improved revenue opportunity as a result of the competitive advantage that we’ve created,” said Rudd. “We will see improved margins on those contracts.”

AI ranks as one of several tailwinds behind infrastructure demand, in addition to power and water, according to AECOM. The company’s high-tech business is now one of its fastest-growing sectors in the U.S., according to Lara Poloni, AECOM president.

“Power demand continues to increase,” said Poloni during the call. “We work across the entire power generation stack, and we have taken a leading position in emerging areas as well.”

Poloni highlighted nuclear fusion as a growing opportunity for the company. AECOM expects the sector to generate nine figures in net service revenue over the coming years through work with Type One Energy and the Tennessee Valley Authority.

Defense spending

Rudd also pointed to defense spending as another key growth driver.

He said AECOM’s pipeline with the U.S. Department of Defense, the firm’s single largest client, climbed 50% amid a jump in global military investment. Meanwhile, more than half of the funding for the Infrastructure Investment and Jobs Act, which expires on Sept. 30, remains unspent, said Rudd.

Nevertheless, geopolitical instability in the Middle East weighed on the quarter. Executives said conflict in the region created roughly a 100-basis-point headwind to net service revenue growth and delayed some project payments. AECOM said collections in the Middle East recovered early in the fiscal third quarter.

“We do expect the Middle East to grow quite significantly,” said Rudd. “The part that is difficult for us to forecast is sort of exactly the pace that it’s going to grow in the third quarter.”

Q2 by the numbers

AECOM reported $179.86 million in profits during the fiscal second quarter, up 25.4% from the same period last year. Revenue for the firm’s Q2 was $3.8 billion, up 1% from a year earlier, according to the earnings report.

Backlog reached $26.2 billion in the fiscal second quarter, up about 8% from the prior year.

Baird, a Milwaukee-based financial services firm, highlighted the report for strong backlog numbers, especially in the U.S.

“AECOM’s F2Q26 results slightly beat on revenue and profits,” wrote Andrew Wittmann, senior research analyst at Baird. “Execution, margins, award all decent, considering. We’re patient on AI-themes, but recognize much improved basis.”