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Which industries are in the expansion phase of their cycle?

AlphaOS investment intelligence · Research and education only — not investment advice · Updated Sep 27, 2026

Direct answer

As of mid-2025, the industries in the expansion phase of their business cycle include Artificial Intelligence & Semiconductors, Defense & Aerospace, Utilities (driven by power infrastructure demand), Industrials tied to reshoring and infrastructure buildout, and Healthcare Technology & Biopharma. These sectors are characterized by rising revenues, expanding margins, accelerating capital expenditure, and strong forward earnings revisions. AI infrastructure spending remains the dominant expansion theme, with hyperscalers committing over $300 billion in combined capex for 2025. Defense budgets across NATO nations are rising toward 2-3% of GDP targets. Reshoring initiatives are sustaining multi-year industrial expansion, while grid modernization is driving a structural utilities upcycle.

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Key Takeaways

  • AI & Semiconductors: NVIDIA reported 122% YoY revenue growth in its data center segment in FY2025; the broader semiconductor cycle has moved decisively into expansion after the 2022-2023 downturn
  • Defense & Aerospace: Global defense spending hit a record $2.44 trillion in 2024 (SIPRI); U.S. defense budget authorization exceeded $895 billion for FY2025, supporting multi-year backlog growth for primes like RTX, LMT, and NOC
  • Industrials & Reshoring: The U.S. CHIPS Act and IRA have catalyzed over $500 billion in announced domestic manufacturing investments; companies like Emerson Electric and Eaton are reporting record order backlogs
  • Utilities & Power Infrastructure: Data center electricity demand is projected to double by 2030; Vistra, Constellation Energy, and NextEra are executing aggressive capacity expansion programs
  • Healthcare Technology & Biopharma: AI-driven drug discovery and GLP-1 therapeutics are powering an expansion cycle; Eli Lilly and Novo Nordisk each exceeded $10 billion in annual GLP-1 revenues in 2024
  • Cybersecurity: Escalating threat environments and mandatory compliance frameworks are driving enterprise security budgets up 12-15% annually, sustaining expansion for CrowdStrike and Palo Alto Networks
  • Commercial Aerospace: Air travel demand has fully recovered above 2019 levels; Boeing and Airbus combined backlogs exceed 14,000 aircraft, sustaining a production expansion cycle through the early 2030s

Evidence & Analysis

  • Microsoft, Amazon, Google, and Meta collectively guided for over $320 billion in combined capital expenditures in 2025, the majority directed at AI infrastructure
  • U.S. ISM Manufacturing PMI returned to expansionary territory (above 50) in early 2025 after a prolonged contraction, signaling a broadening industrial recovery
  • SIPRI reported global military spending reached a record $2.44 trillion in 2024, the steepest single-year increase since the Cold War
  • The IEA projects data centers will consume 1,000 TWh of electricity annually by 2026, up from 460 TWh in 2022, directly driving the utilities and power equipment expansion cycle
  • CrowdStrike reported 22% ARR growth to $4.24 billion in FY2025, reflecting sustained cybersecurity budget expansion across enterprise and government sectors
  • Airbus reported a backlog of over 8,700 aircraft as of early 2025, representing approximately 12 years of production at current output rates

Key Companies

NVDA

NVIDIA Corporation

Epicenter of AI infrastructure expansion — ~80% data center GPU market share; FY2025 data center revenue exceeded $115 billion

LMT

Lockheed Martin Corporation

Largest U.S. defense contractor; $176 billion backlog as of Q1 2025, direct beneficiary of NATO defense spending expansion

LLY

Eli Lilly and Company

GLP-1 market leader; Mounjaro and Zepbound driving biopharma expansion cycle with $13+ billion in combined 2024 revenues

ETN

Eaton Corporation

Electrical infrastructure and power management leader; direct beneficiary of data center and grid modernization buildout; record backlog reported in 2025

CEG

Constellation Energy

Nuclear power expansion leader; signed multi-gigawatt power agreements with hyperscalers including Microsoft to meet surging data center demand

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