Accelevation bets on modular data centers: orders grow as margins come under pressure
Bank of America initiates coverage of Accelevation with a Buy rating: orders for modular products and US data center construction support growth, but transition costs, capacity expansion execution and customer concentration constrain the realization of profits.
Original source：BofA Global ResearchFirst published on Unhidea：Original source date：
Key takeaway
Bank of America expects Accelevation to benefit from data center expansion through its modular equipment, on-site services and domestic capacity, but rapid growth must clear the hurdles of transition costs and capacity utilization.
How does data center expansion translate into company revenue?
Accelevation produces steel structures and power distribution and cooling equipment needed for data centers, and provides on-site installation services. Revenue in 2025 was 448 million dollars, all from the data center market.
Bank of America expects global data center capital expenditure to rise from 618 billion dollars in 2025 to 993 billion dollars in 2026. US data center construction spending in August 2026 rose 73% year over year to an annualized 85 billion dollars. All of the company's revenue comes from the US, exposing it directly to this construction demand.
Bank of America believes the company's on-site service team of more than 800 people and vertically integrated US manufacturing help shorten delivery times. However, this advantage would be challenged if competitors expand domestic capacity and improve delivery times.
What value do modular products add?
SkyBridge prefabricates and tests components such as steel structures, power distribution, cabling and liquid-cooling manifolds at a factory, then installs them in existing data center halls. This transfers some on-site processes to the factory, reducing on-site labor and speeding deployment.
The company says SkyBridge secured approximately 700 million dollars in orders less than 9 months after development began. It expects the modular solutions market to grow at a compound annual rate of 30% through 2030.
Bank of America cautions that orders for complete modules include components that would have been purchased anyway. Based on 2026 electrical and cooling equipment spending of 55.3 billion dollars, a modularizable share of 40%–50%, adoption of 4%–8% and a modular premium of 30%–50%, it estimates total modular product revenue of 1.2 billion–3.3 billion dollars, including approximately 300 million–1.1 billion dollars in incremental value.
Why are margins falling as revenue doubles?
Second-quarter 2026 revenue was 181 million dollars, up 80% year over year but down 29% sequentially. Bank of America attributes the sequential decline to the company's shift from on-site construction to modular projects. Modular products began shipping in August.
Bank of America expects 2026 revenue to rise 102% year over year to 904 million dollars, while gross margin falls from 32.3% in 2025 to 28.6%, mainly due to start-up costs and two low-margin legacy projects. Adjusted EBITDA margin is expected to fall from 20.3% to 17.5%.
Cash flow is also under pressure: free cash flow was negative 16 million dollars in 2025. Bank of America expects negative 19 million dollars in 2026 and a return to positive 145 million dollars in 2027.
What conditions underpin the growth and valuation assessment?
Bank of America expects company revenue and adjusted EBITDA to grow at compound annual rates of 46% and 56%, respectively, from 2026 to 2030. It initiated coverage with a Buy rating and a 20 dollar price target, implying approximately 60% upside from the 12.38 dollar share price cited in the report.
The price target uses 10 times expected 2028 adjusted EBITDA, below the peer average of 14 times expected 2027 EBITDA. Bank of America weighs higher growth expectations against the company's short public-market history, higher leverage and customer concentration. The two valuation multiples refer to different years.
As of June 2026, the company had approximately 1.1 million square feet of manufacturing space and plans to expand to approximately 1.4 million square feet by 2027. If demand slows while the industry continues to expand capacity, pricing pressure and underutilized capacity could depress margins.
The two largest customers accounted for approximately 61% of revenue in 2025. Project delays or cancellations, or customers diversifying their suppliers, could affect growth and margins. Bank of America expects net debt to EBITDA at the end of 2026 to be 2.7 times, above peers. Payments under a tax receivable agreement of approximately 11 million dollars annually for 15 years will also reduce free cash flow available to common shareholders.
