U.S. manufacturing’s high-voltage growth
Perspectives from BofA Global Research’s Leading Analysts
January 22, 2026
Andrew Obin, Senior Research Analyst, Electrical Equipment & Multi-Industry
Opportunities in U.S. manufacturing capex
We expect U.S. manufacturing capex to continue its strong growth. Spending is expected to reach $774bn in 2025, up from $576bn in 2019 or a 5.0% CAGR. This growth has been supported by government policies for reshoring through subsidies and tariffs. Spending on building new factories slowed in 2025 but remains more than double the level seen in 2019. With more buildings complete, companies are shifting toward buying equipment and equipment orders are accelerating.
A big driver of this growth has been megaprojects (individual projects over $1bn). The wave started with semiconductors in 2021 and these now total $327bn in planned spending.
A new wave of pharmaceutical reshoring is starting, with twenty companies announcing $469bn of capex plans since the start of 2025.
From a policy perspective, the One Big Beautiful Bill Act restores 100% bonus depreciation through 2029. Academic studies show meaningful boosts to capex spending when accelerated depreciation has been implemented, including a 10% boost over 2001–04 and a 17% lift over 2008–10.
Picks & shovels (and turbines!) for the data center boom
U.S. manufacturers are also benefitting from rapid growth in data centers. Spending on data center infrastructure (not including IT equipment) is tracking to ~$40bn in 2025, up 29% year over year. We forecast at least 20% y/y growth in 2026. Innovation in artificial intelligence (AI) semiconductors is pushing suppliers to develop new technologies. Cooling equipment firms have expanded into direct-to-chip liquid cooling as AI chips run hotter and hotter. Electrical equipment firms are introducing higher-voltage, direct-current equipment to handle denser power needs. Gas turbine manufacturers are increasingly booking orders for on-site power generation at data centers. With fewer and fewer sites available with grid electricity, we expect this trend toward on-site power generation to continue.
Deregulation is a boost for revenue and margin
The cost of following regulations for U.S. manufacturing companies has grown from 2.6% of revenue in 1980 to 5.3% in 2024, per analysis from the National Association of Manufacturers. This mirrors the growth in funding for regulatory agencies, which rose to 5.2% of the Federal budget today versus 2.7% in 1980. The Trump Administration has focused on reducing these regulatory costs. In FY25, they finalized 646 deregulatory actions and added only five new regulations. We view lower regulatory burdens as both a catalyst for revenue and margins for U.S. manufacturers. For example, since the reversal of the ban on new liquified natural gas (LNG) projects, over $50bn of projects have moved forward. Simplified permitting and regulation should be beneficial to both new manufacturing projects and expansions. On the cost side, the rollback of a single environmental reporting regulation in FY25 is estimated to save U.S. firms $0.3bn per year in compliance costs.
We’re constructive on multiple segments within multi-industry
Installing advanced automation in new U.S. factories makes financial sense because American wages are higher than in many other countries. Factory automation manufacturers are likely to benefit as more manufacturing returns to the U.S.
We also argue that the gigawatt‑scale AI data centers being built will create strong demand for gas turbines, electrical systems, and heating and cooling (HVAC) equipment.
Untangling the wireless rivalry
Competition is constant in the wireless industry. But the ability to bundle broadband and expand assets could determine which company comes out on top.
