Builders’ Data Center Boost Fails to Offset Weak Housing Market

European construction firms’ exposure to a booming data center market has not been enough to offset persistent weakness in residential and industrial construction.

Cie de Saint-Gobain SA posted third-quarter organic sales growth of 2.5% on Tuesday, falling short of analyst expectations of 3.4% growth. Though the building materials company highlighted data centers as a bright spot, it said performance was affected by a continued construction downturn in the UK, fewer new residential projects in North America and subdued renovation activity in France.

The artificial intelligence buildout is boosting demand for manufacturers of construction materials, though the residential and industrial end markets are constrained by stubbornly high interest rates and muted business confidence.

Earlier this month, Swiss maker of construction chemicals Sika AG pointed to a double-digit decline in China’s construction industry in the first nine months of the year amid continued residential weakness, while its data center sales in the Americas grew at a double-digit pace. Shares dipped as its guidance disappointed investors.

French infrastructure company Vinci SA’s shares also slipped after it maintained a cautious outlook. The company’s energy solutions business benefited from growing data center demand, though its core construction business remained subdued.

“France’s construction downturn looks entrenched as confidence sits well below the long-run norm, order books remain thin and builders signal falling hiring and tender prices,” Bloomberg Intelligence analyst Kevin Kouam wrote in September.