Solaris Energy Infrastructure Stock Drops 14% as AI Spending Fears Hit Data Center Power Stocks on Wall Street

Shares of Solaris Energy Infrastructure Inc. fell more than 14% on Thursday, as a broad sell-off in stocks tied to artificial intelligence spending hit companies that supply power to data centers.

Solaris shares fell $10.01, or 14.42%, to $59.36 in midday trading, cutting the company's market value to about $3.9 billion.

The company did not announce any new developments on Thursday, and the decline appeared to be part of a wider retreat from AI-related stocks.

AI jitters hit the market

Technology stocks led Wall Street lower on Thursday as investors grew more cautious about the rising costs of AI investments and the uncertain timeline for returns.

The Nasdaq Composite fell more than 1% in morning trading, while technology was the worst-performing sector in the S&P 500. Growth stocks fell, while investors moved into defensive sectors such as consumer staples and health care.

The sell-off followed earnings from major technology companies that failed to ease concerns about AI spending. Meta shares fell after it introduced new non-voting shares to help fund its AI expansion, while Tesla cut its annual capital spending forecast.

"The thing that makes these AI names more vulnerable is just that they have such high valuations already," said Brendon Dashiell, a portfolio manager at Bogart Wealth.

Other companies tied to the data center buildout also fell sharply on Thursday, including electrical equipment maker Forgent Power Solutions and circuit board maker TTM Technologies.

A data center power play

Houston-based Solaris has transformed itself in recent years from an oilfield services company into a provider of power infrastructure, supplying electricity generation and related services to data centers, energy producers and other industrial customers.

The shift has made it one of a group of companies that investors view as beneficiaries of the AI boom, as technology companies race to secure the enormous amounts of electricity needed to power new data centers.

That positioning had fueled strong gains. Solaris shares had risen about 45% over the past year before Thursday's drop.

Growth and acquisitions

The company has been expanding rapidly. In September, it raised its financial guidance, projecting third-quarter adjusted EBITDA of $110 million to $130 million, up from a previous forecast of $90 million to $105 million, and fourth-quarter adjusted EBITDA of $145 million to $180 million. It also issued initial guidance of $200 million to $240 million for the first quarter of 2027.

Solaris has also made a series of acquisitions to expand its capabilities, including a provider of power generation maintenance services and an engineering and construction company. In August, it announced an investment in Deployable Energy, a developer of nuclear microreactors and small modular reactors.

Debt load in focus

The company's growing debt has also drawn investor attention. In September, Solaris sold $1.25 billion of senior notes due 2032 with a 7% interest rate, upsized from an initial $1 billion offering. It also increased its revolving credit commitments to $850 million.

The company said the proceeds would be used for general corporate purposes, growth capital spending and fees. While the borrowing helps fund expansion, it also raises the company's interest costs and financial risk.

Solaris shares had fallen in several sessions in recent weeks, including a 9% drop on Oct. 14.

Valuation

Even after Thursday's drop, Solaris trades at about 73 times trailing earnings, a high valuation that reflects investors' expectations for rapid growth in its power business. That leaves the stock exposed to swings in sentiment toward AI-related companies.

What's next

Solaris is scheduled to report third-quarter results after the market closes on Nov. 4, with a conference call the following morning.

Investors will watch whether the company meets its raised guidance and for updates on new power contracts with data center customers, as well as any signs that technology companies are slowing their spending on AI infrastructure.