The construction and infrastructure sector is riding a wave of momentum, with equities reflecting a robust performance this year. The standout players in this realm are those harnessing emerging technologies to elevate their offerings. Companies like Trimble, Johnson Controls, and Emerson Electric are not just keeping pace; they are poised to redefine the market landscape, setting the stage for potential outperformance in 2025.
Trimble’s growth strategy is a masterclass in innovation. By integrating traditional positioning hardware with cutting-edge software solutions, Trimble has become a linchpin in the daily operations of its customers. The construction and infrastructure industries are notorious for their complexity, often leading to frustrating delays and spiraling costs. Enter Trimble’s cloud-based construction management software, Construction One. This tool empowers contractors, engineers, and project managers to plan and manage projects in real-time, utilizing digital data from the field. The rapid uptake of this software is not just a flash in the pan; it’s driving significant growth in Trimble’s architecture, construction, engineering, and owners (AECO) segment, which currently accounts for 55% of its annual recurring revenue. With digital integration still in its infancy in these sectors, Trimble is well-positioned for continued expansion, projecting low- to mid-teens growth in annual recurring revenue and earnings as it shifts towards a more software-centric revenue model.
Johnson Controls is also carving out a niche for itself, focusing on commercial buildings while shedding its residential HVAC business. This strategic divestiture allows the company to hone in on retrofitting commercial buildings with smart technologies that not only enhance energy efficiency but also help clients meet their net-zero emissions goals. The company’s OpenBlue digital software platform, which incorporates AI, IoT, and real-time analytics, is a game changer in creating smart buildings. Given that buildings and construction contribute to a staggering 37% of global emissions, Johnson Controls is tapping into a massive growth opportunity. The company’s plan to cut annual expenses by $500 million further solidifies its long-term growth prospects, presenting a leaner, more focused entity ready to tackle the challenges of tomorrow.
Emerson Electric is no slouch either. The company has pivoted towards automation, leveraging mergers and acquisitions to sharpen its focus on industrial software and automation solutions. These offerings are crucial for optimizing operations in various manufacturing settings, from chemical processing to automotive plants. As digital technology and intelligent devices gain traction, Emerson stands to benefit significantly from the growing demand for automation. The push for reshoring production, driven by the need for cost efficiency, underscores the relevance of Emerson’s solutions in the current economic climate.
While the broader economic landscape may face cyclical headwinds, the underlying trends favoring automation and digital integration remain strong. As companies like Trimble, Johnson Controls, and Emerson Electric double down on their core competencies and adapt to market demands, their potential for outperformance in 2025 seems increasingly likely. The fusion of traditional industries with cutting-edge technology is not just a trend; it’s a transformative movement that promises to reshape the construction and infrastructure sectors for years to come.
