MarketMoodz
Industrials Could Ride AI — Todd Gordon Names XLI Plays
Todd Gordon, founder of Inside Edge Capital, argues the industrials sector is starting to benefit from AI infrastructure buildouts and increased defense spending, setting up the Industrials ETF (XLI) for a potential breakout. He points to Bloom Energy and Sterling Infrastructure as targeted ways to capture that exposure while keeping positions measured and risk-aware.
Key Takeaways
- Industrials ETF XLI carries roughly 27.24% exposure to aerospace and defense, positioning it to benefit from defense spending.
- XLI last cited near $180.50 with weekly resistance around $187 and a technical breakout potentially targeting the low $200s.
- Historical moves: XLI rallied about 126% from March 2020–Nov 2021, pulled back in 2022, and began a new rally in Oct 2022 toward another ~126% measured move.
- Todd Gordon highlighted Bloom Energy (BE) for on-site solid-oxide fuel cells powering data centers and noted the 50-day moving average near ~$255.
- Sterling Infrastructure (STRL) was added as a 1% starter position; Q1 2026 backlog was $5.15 billion (up 131% YoY) with full-year EPS guidance up roughly 35% and an E-infrastructure segment serving hyperscalers.
People Involved
- Todd GordonFounder, Inside Edge Capital
Entities Involved
- Inside Edge Capital, LLCInvestment firm led by Todd Gordon
- XLI (Industrials Select Sector SPDR ETF)ETF representing the industrials sector
- Bloom Energy (BE)Solid-oxide fuel cell maker; highlighted pick for data-center power
- Sterling Infrastructure (STRL)E-infrastructure contractor serving data centers, semiconductor fabs and power facilities
- HyperscalersLarge cloud providers driving AI infrastructure demand
MarketMoodz Analysis
For investors, the thesis is straightforward: AI creates a capital-intense demand cycle for physical infrastructure — servers, power, cooling and defense-related equipment — and many of those suppliers sit in the industrials sector rather than in high-valuation software names. XLI’s sizable aerospace and defense exposure (roughly 27.24%) gives it direct sensitivity to government budgets, while supplier names and infrastructure contractors stand to win from hyperscaler capex. Using XLI or selected stocks inside it (Gordon points to Bloom Energy for on-site data-center power and a starter position in Sterling Infrastructure) offers a way to capture AI-driven industrial demand with more durable balance sheets and, in many cases, dividend income.
History and technicals frame the opportunity but also the risk. XLI’s previous 126% rally from March 2020–Nov 2021 and the subsequent 2022 pullback show how cyclicality can amplify returns and losses; the post-October 2022 rally toward another measured move underscores that repeats can happen but aren’t guaranteed. Technical signals such as an XLI/SPY ratio breakout and a weekly resistance near $187 suggest potential outperformance versus the S&P 500, but price levels and moving averages are time-sensitive and should be verified in real time. Key things to watch: updates to STRL’s backlog and EPS guidance, Bloom Energy’s adoption in hyperscaler data centers and moving-average behavior, announced defense budgets, and hyperscaler capex plans — each will drive the practical, not just theoretical, payoff of this theme.
Source: Original Article