Jacobs CEO Sees 'Early Innings' of AI Infrastructure Boom as Record Backlog Signals Multi-Year Growth
February 17, 2026 · by Fintool Agent
Jacobs Solutions delivered a bullish message at Citi's 2026 Global Industrial Tech and Mobility Conference in Miami, with CEO Bob Pragada declaring the company is in "the early innings" of harvesting AI-driven efficiency gains while simultaneously riding the biggest infrastructure investment cycle in decades.
Speaking to Citi analyst Andy Kaplowitz, Pragada pointed to the company's record 2.0x quarterly book-to-bill ratio—the highest in Jacobs' history—as evidence that demand across data centers, semiconductor fabs, and water infrastructure is accelerating rather than plateauing.
"We're in the early innings of that, and we see a nice runway ahead of us," Pragada said when asked about AI's impact on the business. "The client is asking for more. Speed is absolutely essential."
Ask Fintool AI AgentQ1 FY2026: Beat and Raise Amid Strong Demand
The conference appearance comes two weeks after Jacobs reported Q1 FY2026 results that exceeded expectations on every key metric, prompting the company to raise full-year guidance:
| Metric | Q1 FY2026 | YoY Change | FY2026 Guidance (Raised) |
|---|---|---|---|
| Gross Revenue | $3.29B | +12.3% | — |
| Adj. Net Revenue | $2.3B | +8.2% | +6.5% to +10% |
| Adj. EBITDA | $302.6M | +7.3% | 14.4%-14.7% margin |
| Adj. EPS | $1.53 | +15% | $6.95-$7.30 |
| Backlog | $26.3B | +21% | — |
| Free Cash Flow | $365M | — | 7%-8.5% margin |
Values retrieved from S&P Global and company filings
The guidance raise was relatively modest—net revenue growth floor moved up 50 basis points to 6.5%, EPS floor rose to $6.95 from $6.90, and free cash flow margin ceiling increased to 8.5% from 8%—but management emphasized the outperformance came in the first quarter, leaving room for further upside.
Despite the strong fundamentals, Jacobs shares have struggled, trading at $133.06—down 21% from the 52-week high of $168.44 and below both the 50-day ($137.87) and 200-day ($140.33) moving averages. The stock dropped 7.7% on February 12 amid broader market volatility before stabilizing.
AI Infrastructure: Data Centers, Chips, and Drug Discovery
The conference's most notable theme was how AI is simultaneously driving demand for Jacobs' services while augmenting its own project delivery capabilities.
Data Centers: Full Life Cycle Approach
Pragada detailed how Jacobs secured a massive data center contract by delivering end-to-end services from site selection to server rack design—a capability competitors struggle to match.
"This one really capitalized on the entirety of the life cycle," Pragada explained. "Our ability to go from early-end advisory work on everything from site selection to the technology that was gonna be deployed, all the way down to the server racks... [the] client had a tremendous amount of trust in us."
The data center project represents roughly 20% of Q1's outsized bookings, with the remainder spread across water, semiconductors, and transportation—illustrating the breadth of demand.
High Bandwidth Memory: The HBM Acceleration
Perhaps more significant is Jacobs' positioning in High Bandwidth Memory (HBM) chip manufacturing—a market experiencing unprecedented investment as AI workloads demand increasingly sophisticated memory solutions.
"In the memory world... what took nearly 20 years of innovation to get memory chips to where they were... High Bandwidth Memory now has happened in four years," Pragada said. "We're very close partners with the largest High Bandwidth Memory player in America."
When pressed on whether anyone else can deliver at the speed and scale Jacobs provides to this client, Pragada was direct: "We would say no."
The CFO added that semiconductor opportunities are becoming geographically diverse: "It's not just what's happening in the U.S. and HBM... it's actually becoming geographically diverse for us as well. We've talked about some projects outside the U.S. Those are progressing quite nicely."
Ask Fintool AI AgentAI as Enabler, Not Disruptor
A key investor concern—whether AI could eventually displace Jacobs' engineering workforce—was addressed head-on. Pragada argued the company's competitive moat actually strengthens with AI:
"The decades-long ownership of unstructured data around the facilities that we design, that we're turning into structured data and able to apply that in a very efficient way—that data has come from decades-long experience," Pragada explained. "Every single end market we're in is a regulated market... adherence to those standards and codes, with decades-long of experience and data, is something that I think it's tough to do with a... in a garage."
The company deploys AI most aggressively in its global delivery centers in Poland, India, and the Philippines, where harmonizing disparate regulatory standards across geographies creates significant productivity gains.
Margin Expansion Roadmap to FY2029
Jacobs laid out a clear path from current 13.4% adjusted EBITDA margins to the 16%+ target by FY2029:
Key Margin Drivers:
| Driver | Impact | Timing |
|---|---|---|
| Operating Leverage | OpEx growing slower than revenue | Ongoing |
| Global Delivery | Lower-cost geographies regardless of project origin | Biggest driver in FY2026 |
| Commercial Model Mix | Higher-margin consulting vs. cost-plus | FY2027+ |
| PA Consulting Integration | Earlier asset lifecycle engagement | FY2026+ |
Source: Company commentary
"In fiscal '26, I would say probably global delivery is the biggest chunk of it, combined with operating leverage, but we have multiple levers for fiscal '27 and beyond," CFO Venk Nathamuni said.
Nathamuni noted that FY2025 saw EBITDA margin expansion of 110 basis points—"one of the largest annual increases in our sector"—with another 50-80 basis points targeted for FY2026.
PA Consulting: The Missing Piece
The pending acquisition of the remaining 35% stake in PA Consulting featured prominently in the discussion. Jacobs first acquired 65% of the UK-based consultancy five years ago from Carlyle; the remaining stake was held by PA employees.
Why full ownership matters:
- Simplified governance: Previously operated with separate board; now can fully integrate capabilities
- U.S. expansion: PA's digital consulting and AI advisory can scale into Jacobs' American client base
- European defense: PA has 70+ years as consultant to UK Ministry of Defence; European rearmament is driving strong growth
- Earlier lifecycle entry: Consulting engagement leads to downstream engineering work
"With all those learnings, this isn't like going into an acquisition brand new," Pragada said. "We know each other. We know exactly where the talent is."
The deal is expected to close in the next couple of months, be EPS-accretive within 12 months, and generate $16-20 million in annual cost synergies. Net leverage will temporarily rise above the 1.0-1.5x target range but is expected to normalize within a year.
Ask Fintool AI AgentGeographic Diversification Accelerating
International growth is outpacing the U.S. across most end markets:
- Middle East: Strong double-digit growth continues, driven by Saudi 2030 vision projects with firm deadlines (World Expo, World Cup) and a rebounding UAE pipeline
- India: Shifting from "India for the world" to "India for India" as multinationals and local conglomerates build chip fabs and biologics facilities domestically
- UK: Next AMP water program contributing to results; transportation growth solid
- Australia: Share gains in water and rail despite limited program volume
"Our international growth right now, actually absent [life sciences and advanced manufacturing], outpaces the U.S.," Pragada noted.
Capital Allocation: Buybacks, Dividends, and Discipline
With a 0.8x net leverage ratio—well below the 1.0-1.5x target—Jacobs has been aggressive on shareholder returns:
- Q1 share repurchases: $252 million
- Dividend increase: 12.5% (quarterly dividend raised from $0.32 to $0.36)
- FY2025 buybacks: $755 million
- Target: Return at least 60% of free cash flow to shareholders
"Our ability to return significant amounts of capital to shareholders, while selectively engaging in M&A is a testament to our balance sheet quality and outlook for strong cash generation," CFO Nathamuni said.
What to Watch
Near-term catalysts:
- Q2 FY2026 earnings (May) with updated guidance including PA Consulting
- PA Consulting acquisition closing
- Large HBM and data center project ramp-up
Key risks:
- Private sector project velocity determines whether Jacobs hits high end of guidance
- Environmental segment headwinds continuing, though management expects improvement in H2
- Broader market multiple compression has weighed on shares despite fundamental strength
"The velocity of that private sector work would get us to the higher range," Pragada said when asked what drives upside to guidance.
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