Could Comfort Systems Be a Buy if AI Data-Center Spending Holds?

Comfort Systems (FIX) operates as a high-return, low-capital-intensity business specializing in mechanical, electrical, and plumbing contracting. While the company maintains a stable core of maintenance and service revenue, its recent performance is heavily tied to the artificial intelligence data center build-out, which has caused operating margins to double since the emergence of ChatGPT. Management utilizes a successful roll-up strategy in a fragmented industry, maintaining a net cash position and strong free cash flow conversion without deteriorating rates of return. However, the current valuation reflects a "Rorschach test" for investors regarding the sustainability of AI-related construction. Potential risks include a significant revenue decline if hyperscalers reduce capital expenditures due to underwhelming returns on AI investments. Consequently, the stock offers a projected 10% to 15% return but carries a low safety score due to the cyclical nature of the current infrastructure boom.