Street Calls of the Week
Investing.com -- Bernstein expects U.S. non-residential construction to rebound in 2026 as monetary and fiscal policy tailwinds align and equipment supply tightens.
In a new note, Bernstein said: “This call makes the case for a rebound in US non-residential construction in 2026. Monetary and fiscal policy are aligning, the equipment supply/demand balance is tightening, and despite the strong rally off the April bottom, stocks still have room to run.”
Non-residential construction spending, excluding infrastructure, data centers and the grid, has fallen 15% since 2023, in line with past downturns. Overall spending is tracking down 1% year-on-year in 2025.
However, Bernstein pointed to a sharp monetary turnaround, noting that “global money supply growth leads construction activity by 24 months (R2=0.67) and it started rebounding in late 2024, which suggests a non-resi recovery in mid-2026.”
On the fiscal side, the recent U.S. tax policy shift on accelerated bonus depreciation could “drive 7% cross-cycle growth in non-resi construction spend,” particularly in factory construction, which could be boosted by 20%.
Bernstein’s model forecasts 4% growth in 2026, led by five markets: public infrastructure (+3%), manufacturing (+12%), electric grid (+8%), renewable power (+20%), and data centers (+25%).
Meanwhile, commercial and office markets remain pressured, expected to decline 6% year-on-year.
The bank also flagged “four signs that the equipment supply/demand balance is tightening,” including improving rental rates, rising used equipment prices, declining used inventories, and healthy new equipment levels.
On stock selection, Bernstein said: “URI stands out” in the U.S., with 40% of revenue from non-residential construction and growth at 2x the market. In Europe, AHT and AMRZ are highlighted, with CRH rated Outperform.