Babcock & Wilcox Lands $2.4 Billion AI Power Contract as Negative Equity Shadows the Rally

Babcock & Wilcox Lands $2.4 Billion AI Power Contract as Negative Equity Shadows the Rally A 1.2 GW gas power deal drove BW's backlog up 470%, but negative equity of $131.5 million and a 2026 debt refinancing shadow the surge. Babcock & Wilcox secured a $2.4 billion design-build contract with Base Electron for 1.2 gigawatts of natural gas-fired power, a deal that drove the industrial equipment maker's project backlog up 470% to $2.8 billion and pushed its shares to $14.54 by Thursday (2026-05-21), a gain of 129.34% for the year.² The contract matters because it puts a dollar figure on what has so far been a thesis. Data centres require firm, dispatchable power that intermittent renewables cannot guarantee around the clock, and natural gas is filling that gap directly. Base Electron is already evaluating a further 1.2 GW option that would double the original scope, and management puts the global pipeline at more than $12 billion.² Management guided 2026 core adjusted EBITDA to between $70 million and $85 million, roughly 80% year-on-year growth, with that figure explicitly excluding any additional data centre upside. But Babcock & Wilcox carries stockholders' equity of negative $131.5 million and faces a 6.50% note refinancing due later this year. A surging backlog does not automatically fix a leveraged balance sheet, and the refinancing lands at a point when credit conditions remain tight.² Grid-scale storage firm Fluence Energy is chasing the same AI tailwind through a different route. The company reported new master supply agreements with two major hyperscalers, signalling an expansion into data centre energy storage, and management reaffirmed its 2026 revenue target of approximately $3.2 billion to $3.6 billion, citing strong visibility with 85% of the midpoint already under contract as of Thursday (2026-05-21).¹ Analysts project a strong third quarter as deferred revenue from second-quarter shipments is recognised. Sentiment has been checked, though, by a secondary offering of 20 million Class A shares by existing shareholders in mid-May 2026, priced around $21.00. The move expanded the public float but triggered immediate price volatility and raised questions about whether institutions are rotating out near the top of the move.¹ Fluence's operational margins improved despite a second-quarter revenue miss, and management confirmed roughly $80 million in supply chain disruptions are normalising with deliveries returning to schedule. Still, the company remains loss-making. That makes the current multiple fragile if any quarter fails to deliver the deferred revenue analysts are counting on.¹ The public investment backdrop offers some context. Congress's task force on the National AI Research Resource recommended $2.6 billion in funding over six years; actual annual appropriations as of fiscal year 2026 stand at roughly $30 million. A separate recommendation called for doubling non-defence AI research and development funding annually until it reaches $32 billion a year.³ The gap between those targets and current appropriations confirms that the power infrastructure buildout is being financed overwhelmingly by private hyperscaler capital, not public coordination. That is fine while the large technology companies are expanding aggressively. It becomes a risk if the spending cycle decelerates through margin pressure, regulatory action, or a demand-side correction that does not yet show up in any of the current forward guidance.³ For Babcock & Wilcox, the immediate read is straightforward: whether Base Electron exercises its second 1.2 GW option. If it does, the 470% backlog jump starts to look like the leading edge of a durable build cycle. If it lapses, the contract was a single event rather than a pipeline, and the refinancing due later this year becomes the story.²