Babcock & Wilcox secures $2.4 billion deal to power Applied Digital's AI data centers

Babcock & Wilcox Secures Major Power Generation Contract for AI Data Centers

Babcock & Wilcox received full notice to proceed on a $2.4 billion project to deliver power generation equipment for Applied Digital's artificial intelligence campuses, sending shares surging nearly 31% in early trading 1

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. Base Electron, an independent power producer backed by Applied Digital, granted final approval for the 1.2 gigawatts capacity initiative that addresses the mounting AI power demand across the technology sector 3

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The design-build agreement positions Babcock & Wilcox to handle engineering, procurement, and construction of the facility, with work already underway. Under the terms, the company will supply four 300-megawatt natural gas-fired boilers and steam turbine generator systems designed specifically to meet the demands of high-density AI data centers 3

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. Siemens Energy will design and supply the steam turbine generator sets as part of separate power supply agreements 3

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Record Electricity Demand Drives Energy Infrastructure Expansion

US power demand reached record highs in 2025 and is projected to accelerate further as major tech companies rapidly expand data centers, some consuming as much electricity as an entire city at a single location 1

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. Applied Digital formed Base Electron specifically to produce power for the technology firm's AI campuses, and the power producer subsequently hired Babcock to deliver the critical energy infrastructure 2

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Kenneth Young, Babcock & Wilcox Chairman and CEO, emphasized the strategic importance of the deal: "Receiving full notice to proceed for this $2.4 billion project further underscores the strategic role B&W plays in supporting the rapidly expanding power needs of large-scale AI data centers" 3

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. He added that their natural gas-fired boilers and related technologies provide the reliable, high-capacity energy generation required for the grid today.

Future Expansion Plans and Growing Project Pipeline

Applied Digital CEO Wes Cummins confirmed the company is evaluating an option with Base Electron to deliver another 1.2 gigawatts of generation capacity in the future, potentially doubling the scale of the partnership 1

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. Cummins described the initiative as "a critical step in turning power into operational AI capacity" that supports the company's long-term campus strategy and disciplined approach to scaling AI infrastructure 3

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Babcock & Wilcox's global project pipeline now exceeds $12 billion, with a continuing operations backlog of $2.8 billion that includes this massive AI data center initiative 3

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. Kenneth Young revealed the company is in discussions on other data center opportunities reflected in the current pipeline, while also noting increased coal utilization and opportunities to deliver coal technologies that provide reliable and secure power to utility customers in North America 1

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Financial Performance Amid Infrastructure Boom

Separately, Babcock posted revenue of $161.0 million in the fourth quarter, beating analysts' average estimate of $155.60 million 1

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. Operating income rose to $12.2 million from $2.6 million a year earlier, while adjusted EBITDA increased 53% to $16.4 million 3

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. Results were supported by a 17% increase in parts and services revenue, driven by stronger coal generation usage and higher baseload demand in North America 3

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. The company also strengthened its balance sheet by paying off bonds due in February 2026, ending the year with net debt of $119.7 million 3

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