We recently published a list of Why These 15 Construction Stocks Are Plunging in 2025. In this article, we are going to take a look at where Sterling Infrastructure Inc (NASDAQ:STRL) stands against other construction stocks that are plunging in 2025.
2025 is shaping up to be a pivotal moment for the construction industry. Not long ago, the sector was booming. Infrastructure construction stocks soared as government contracts poured in and a broader economic expansion fueled optimism. There were massive infrastructure and energy projects with endless growth potential, and companies tied to these projects thrived.
However, the pendulum has swung hard in the opposite direction. Today, the industry faces a stark slowdown, and those once-high-flying construction stocks are plunging. The U.S. GDP is expected to contract in Q1 2025, and residential and commercial projects are stalling as financing costs rise and demand weakens.
Looking ahead, the outlook is murky at best. Some experts predict a modest rebound in late 2025 if interest rates ease and loan activity picks up. But considering tariffs are only getting higher, this could drive up inflation again and cause interest rates to stay up.
These stocks have borne the brunt of the downturn. It’s worth looking into if you want a front-row seat to the industry’s ups and downs.
Methodology
For this article, I screened the worst-performing construction stocks year-to-date.
I will also mention the number of hedge fund investors in these stocks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A busy airport terminal, highlighting the company’s strong transportation arm.
Sterling Infrastructure Inc (NASDAQ:STRL)
Number of Hedge Fund Holders In Q4 2024: 28
Sterling Infrastructure Inc (NASDAQ:STRL) is an e-infrastructure, transportation, and building solutions company. This company specializes in large-scale infrastructure improvement projects for sectors like data centers, highways, residential construction, and more.
The stock is down significantly so far in 2025, as a significant portion of Sterling’s backlog is tied to data center projects and AI-related infrastructure.
In 2025, the general slowdown in AI-related spending and the dissipation of hype surrounding data centers has led to concerns about future revenue growth in its e-infrastructure segment.
The Building Solutions segment has faced headwinds due to affordability issues and high mortgage rates, particularly in markets like Dallas. In Q4 2024, this segment reported a 17% decline in operating income and a 3% drop in revenue.
Plus, prolonged higher interest rates have suppressed residential construction activity further. Despite expectations of rate cuts later in 2025, the current environment continues to negatively impact Sterling’s growth prospects.
The consensus price target of $185 implies 58.12% upside.
STRL stock is down 30.54% year-to-date.
Overall, STRL ranks 7th on our list of construction stocks that are plunging in 2025. While we acknowledge the potential of STRL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than STRL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
