Babcock & Wilcox Enterprises (BW) saw its stock surge approximately 30% to $18.91 on Monday, following the release of first-quarter results that showed a sharp increase in revenue and a substantial rise in orders tied to the growing electricity needs of artificial intelligence data centers. Trading volume was significantly above average, reflecting strong investor interest in the company's pivot toward power generation for AI infrastructure.
Strong Revenue and Order Growth
The company reported first-quarter revenue of $214.4 million, a 44% increase compared to $148.6 million in the same period last year. Adjusted EBITDA climbed to $16.1 million from $4.0 million a year ago. However, the net loss from continuing operations widened to $79.6 million, up from $15.6 million, primarily due to $81.8 million in non-cash charges related to warrants and other equity-linked costs tied to the rise in Babcock & Wilcox's stock price. Excluding those items, adjusted net income from continuing operations was $2.2 million.
New bookings for the quarter reached $2.5 billion, boosting the company's backlog to $2.7 billion as of March 31, compared to $467.9 million a year earlier. The company cautioned that its backlog reporting may differ from peers and warned that contracts are subject to change or cancellation.
AI Data Center and Power Plant Deals
CEO Kenneth Young highlighted strong interest from AI data center and hyperscaler clients in Babcock & Wilcox's power generation equipment. A key driver was the finalization of a $2.4 billion deal on February 26 with Base Electron, an independent power producer linked to Applied Digital, to design and install four 300-megawatt natural gas plants. The project is expected to begin operations in 2029.
Base Electron contributed $31.0 million in revenue during the first quarter. During the earnings call, Young told analysts that Base Electron's revenue will increase further this year, with more substantial growth anticipated in 2027 as construction accelerates.
Financial Position and Outlook
As of March 31, Babcock & Wilcox had secured debt and bonds of $237.2 million, with cash, cash equivalents, and restricted cash totaling $194.8 million, resulting in net debt of $42.4 million. The company repaid $15 million of its December 2026 bonds during the quarter and aims to retire the remaining bonds later this year. Management reaffirmed its 2026 adjusted EBITDA target of $80 million to $100 million.
The broader market for power equipment is booming due to AI-driven demand. GE Vernova recently raised its 2026 guidance after a surge in data center orders, and Siemens Energy, a supplier of steam turbine systems for Babcock & Wilcox's projects, also lifted its outlook on strong grid and power equipment demand.
Risks and Execution Challenges
Despite the positive momentum, Babcock & Wilcox faces risks. The company noted that its backlog is not a reliable indicator of future performance, as contracts can be altered or canceled by customers. Other risks include supply-chain disruptions, potential contract disputes, debt covenants, and the need to repay or refinance its 6.50% senior notes maturing on December 31, 2026. Management stated that as of March 31, there was no substantial doubt about the company's ability to continue operating, but cautioned that this depends on generating cash and successfully delivering projects.
Investors are interpreting the quarter as evidence that Babcock & Wilcox's AI power business is transitioning from hype to tangible revenue. The challenge ahead will be converting its $14 billion-plus pipeline into profits and real cash flow, while navigating supply chain issues, permitting hurdles, and potential shifts in customer plans.
