Key Points
The need to upgrade data center development, the electric grid, and transportation creates a bullish outlook for infrastructure.
After years of sluggishness, the U.S. manufacturing sector is finally expanding again.
The iShares U.S. Infrastructure ETF (IFRA) is an ideal way to play this growing theme.
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One of the biggest themes over the next several years is likely to be the billions of dollars being invested in infrastructure development. The most visible recipient would be data centers, but it could also apply to other areas of the economy.
Power grids will need to be revamped to handle the coming electricity demand. Clean energy isn't necessarily a priority for the current administration in the United States, but it will still need to develop over the coming years and decades. Roads, bridges, and rail all need to be improved. Cell tower coverage could be expanded.
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In short, there's no shortage of demand here.
Image source: Getty Images.
That's why I think the iShares U.S. Infrastructure ETF (NYSEMKT: IFRA) could be a top investment for 2026. This exchange-traded fund's (ETF) top-three sector holdings -- utilities (42%), industrials (31%), and materials (20%) -- are all outperforming the S&P 500 by a wide margin this year as investors have moved away from tech. The ETF owns transportation companies, equipment manufacturers, energy providers, and other infrastructure plays that all stand to benefit from both product demand and capital investment.
The latest ISM Manufacturing PMI data shows that this sector is finally expanding again. If infrastructure companies piggyback off of this economic acceleration and capitalize on a new wave of related spending for industry development, this ETF could build on its current 12% year-to-date return (as of March 4, 2026) and turn into a big winner in 2026.
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
