Engineering – R&D (research and development) Services industry is poised to benefit from rising construction activities in the United States that require state-of-the-art construction and engineering services. The Trump administration's push to boost infrastructure spending is another vital growth catalyst for the industry.
Also, the industry is poised to gain from the rapid usage of artificial intelligence (AI) technologies to deliver smart buildings and mega projects, while identifying and addressing diminishing margins. These technologies have been helping firms achieve operational efficiencies, thereby reducing costs while improving margins.
The Zacks-defined Engineering – R&D Services industry is currently in the top 43% of the Zacks Industry Rank. Since the industry is ranked in the top half of the Zacks Ranked Industries, we expect it to outperform the market over the next three to six months.
At this stage, we have narrowed our search to three Engineering R&D services stocks with a Zacks top rank for investment in the long term. These stocks have provided more than 25% returns year to date. Massive adoption of AI technologies will ensure further upside over a long time period.
These stocks are: Sterling Infrastructure Inc. STRL, Innodata Inc. INOD and Legence Corp. LGN. Each of our picks currently carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our three picks year to date.
Image Source: Zacks Investment Research
Sterling Infrastructure Inc.
Zacks Rank #1 Sterling Infrastructure specializes in constructing complex data centers, e-commerce distribution facilities, and manufacturing sites. The company is a major provider of high-density, AI-Powered data centers. STRL is a notable beneficiary of the massive AI data center boom.
E-Infrastructure Solutions projects develop advanced, large-scale site development systems and services for data centers, e-commerce distribution centers, warehousing, transportation, energy and more.
Sterling’s combined offering of site development and electrical services is gaining traction faster than expected. STRL highlighted that in the first quarter of 2026, two data center campuses moved to integrated execution six to eight months earlier than planned, validating cross-sell traction and schedule compression benefits.
STRL’s complementary investments — AI tools that increased project manager capacity by about 15% and a modular manufacturing program that will triple capacity within nearly 18 months — reduce field labor intensity and enhance quality/efficiency.
Sterling Infrastructure has an expected revenue and earnings growth rate of 59.2% and 75.7%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 2.1% over the last 60 days.
Innodata Inc.
Zacks Rank #1 Innodata has established itself as a crucial partner in the AI revolution providing high-quality data needed to train advanced language models. INOD is expected to benefit from the massive demand for supplying state-of-the-art data engineering to large language model building and maintenance over the long term.
INOD appears to be entering a stronger phase of AI-driven expansion, supported by accelerating customer adoption, improving profitability and a widening set of growth opportunities. The growth story is shifting toward higher-value services.
Innodata’s Digital Data Solutions work includes AI training and post-training data, model evaluation, safety testing, deployment and integration, and AI-enabled platforms. INOD is also moving higher up the AI value chain. Beyond supplying training data, it now provides reasoning datasets, trust and safety services, model evaluation, agent optimization and physical AI support.
INOD’s newly launched Evaluation and Observability Platform has already secured its first $1 million customer engagement, while additional companies are evaluating the platform, and potential hyperscaler partnerships could broaden distribution. The company is also expanding its delivery capabilities to strengthen operational efficiency and maintain a competitive edge in the fast-evolving AI services market.
INOD continues to focus on building a stronger delivery framework that supports rising project volume and new customer engagements across major technology clients. By scaling its global operations and enhancing technical delivery, it intends to manage increasing demand for complex data and AI integration projects.
Innodata has an expected revenue and earnings growth rate of 42.5% and 23.9%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 7.5% over the last 90 days.
Legence Corp.
Zacks Rank #2 Legence is a provider of engineering, consulting, installation and maintenance services for mission-critical systems in buildings. LGN specializes in designing, fabricating and installing complex HVAC, process piping and other mechanical, electrical and plumbing systems.
LGN provides physical AI infrastructure support through high-complexity mechanical, electrical, and plumbing engineering and construction. LGN specializes in building performance and mission-critical cooling and power systems required to support massive AI deployment in data centers.
Legence has an expected revenue and earnings growth rate of 64.9% and 14.7%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 0.7% over the last 60 days.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
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Innodata Inc (INOD): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).