Investors are increasingly recognizing the industrial sector's role in the AI growth trade, traditionally dominated by semiconductors and software. The Industrial Select Sector SPDR Fund (XLI) is showing bullish momentum, currently trading at $180.50 and approaching a key resistance level of $187.
A breakout above this level could signal a potential rally similar to the previous 126% increase from March 2020 to November 2021. The sector's performance is bolstered by rising defense spending and a favorable ratio of industrials to the S&P 500, suggesting that industrial stocks may outperform broader market indices.
Notable companies in this space include Bloom Energy, which focuses on on-site solid oxide fuel systems for data centers, and Sterling Infrastructure, which is involved in building infrastructure for the AI economy.
Both companies are expected to see significant growth, with Bloom Energy's earnings per share (EPS) projections rising and Sterling Infrastructure's backlog increasing by 131% year-over-year to $5.15 billion. Investors are encouraged to identify leading stocks within the industrial sector to capitalize on this growth trend