Both PPG Industries Inc. and Sherwin-Williams Co. underscored the growing importance of data centers to their revenue streams during their recent earnings calls.
The two companies point to rising orders from data centers, chip fabrication facilities, and the trend of bringing production back to domestic locations as key growth drivers.
Building a data center demands various specialized coatings, such as fireproofing for steel beams, heavy-duty flooring able to support heavy machinery, insulating coatings for electrical parts, and dielectric coatings for circuit boards. PPG and Sherwin-Williams both offer comprehensive product lines that cater to these needs, giving them an edge as tech giants like Amazon, Microsoft, and Google expand their cloud and AI infrastructure. The trend is further bolstered by the reshoring of semiconductor fabrication, which demands similar high-performance coatings for cleanrooms and equipment.
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Data center construction is a capital-intensive process that requires multiple layers of protective and functional coatings. Intumescent paints must be applied to structural steel to maintain fire ratings, while conductive flooring helps prevent static discharge that could damage sensitive servers. Dielectric coatings are used on electrical components to insulate and prevent short circuits. Both PPG and Sherwin-Williams have developed specialized product lines to meet these precise specifications, allowing them to charge premium prices.
While the data center boom provides a strong tailwind, both companies are facing headwinds in other sectors. Residential and commercial construction demand has softened due to rising interest rates and economic uncertainty, particularly in Europe and the automotive refinish sector. However, the specialized nature of data center coatings allows PPG and Sherwin-Williams to command higher prices and margins, partially offsetting weakness elsewhere.
On Wednesday's earnings call, PPG CEO Tim Knavish stated, "There's quite a pipeline in data center work, which is not only fire protection, but structural steel flooring, insulative coatings, dielectric coatings."
Sherwin-Williams similarly highlighted the role of infrastructure investment in driving demand. CEO Heidi Petz said on Tuesday's call while discussing the protective and marine business, "Data centers, semiconductor infrastructure, and manufacturing on-shoring are among several drivers of this growth."
According to industry estimates, global data center construction spending is expected to exceed $300 billion by 2025, fueled by hyperscalers such as Amazon, Microsoft, and Google. Each facility requires thousands of gallons of specialized paints and coatings, from intumescent fireproofing to anti-static flooring. PPG and Sherwin-Williams have been expanding their product portfolios to capture this niche, positioning themselves as essential suppliers for the digital infrastructure boom.
However, both firms are cautious about the broader economy. Sherwin-Williams does not anticipate a broad upturn in demand, while PPG noted uneven conditions across various markets, including Europe and the automotive refinish sector.
The executives attributed their growth to pricing power, market share gains, and effective commercial execution, even as overall demand remains soft.
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