Sifting Through the Data Center Buildout Wreckage: Total Site Solutions $TSSI

Has the tariff headlines made everyone forget that we are in an Artificial Intelligence Revolution? It’s the nature of the hot new thing that it gets taken too far at times. At some point, exponential projections are on a collision course with reality. But there are businesses at the epicenter of the data center buildout with stock prices that have been more than cut in half, and that buildout has not gone away. Take a look at the graph below, where data center construction rocketed upwards from $10 billion in 2021 to over $120 billion for 2024, surpassing all other manufacturing construction spending. Where is that data center construction spending headed? It might not be an exponential curve, but it probably won’t be less than $100 billion a year for a very long while.

The Site Solutions, Inc. (TSSI) is a company that procures, deploys, integrates, and maintains modular AI data center clusters. Around 96% of current revenues come from Dell, the former employer of the current CEO. On one hand, Dell just signed a multi-year contract, guaranteeing a revenue floor for TSSI for the medium term. This also could make TSSI a potential acquisition target for Dell. On the other hand, TSSI’s ability to market their products and services to customers other than Dell is somewhat unproven.

This could just be the early stage of the AI data center buildout, it is still the era of the hyperscalers, and TSSI’s greatest moment might come when more moderately sized companies want a modular AI turnkey solutions to manage their proprietary data in house rather than let Amazon or Microsoft mine it for their own purposes.

Even just supporting Dell as a customer has led to explosive growth, revenue in 2022 was $30.6 million, 2023 was $54.4 million, and 2024 was $148.1 million. Management is guiding for revenues for Q1 2025 of over $50 million, and for revenues of Q1 and Q2 combined to be over $120 million, but warns that 2025 could be lumpy. Things are moving pretty fast if management struggles to guide more than six months out, but that is the speed of change right now.

TSSI designed and is opening a new facility in April, which when it was first planned a few months ago needed to have a power hookup to handle 4.5 MW. In just the last couple of months, they have had to go back to the city and the utility to get that increased to 15 MW by this summer, with room to expand it to 40 MW over time. The power demand and cooling demand of Nvidia’s latest generation of chips is just that intense.

As TSSI scales up, they flipped to GAAP net income positive, posting earnings per share of $0.24 in 2024, up from breakeven in 2023. It’s always wise to be cautious of adjusted EBITDA figures, but the integration and procurement business has quirks in GAAP accounting if parts are modified or installed as is from manufacturers. In 2022, Ebitda was $1.6 million, 2023 was $2.6 million, and 2024 was $10.2 million. Management is guiding that 2025 adjusted EBITDA will be at least 50% more than in 2024. I think they would give more precise guidance if they even knew how things would unfold. As of March 27th, they didn’t even know if they would use their old facility, or sublease it when the new facility reaches full production around June.

Putting a precise valuation on an aggressive growth stock during an industrial revolution isn’t an easy task. Fortunately, the recent stock market sell off has given us some outrageous buying opportunities. TSSI is trading at a market capitalization of $164 million, with trailing twelve month revenues of $148 million. Whatever multiple should be slapped onto TSSI, 1.1x price to sales is very cheap.

There is a sentiment that once a bubble has popped, it can’t be re-inflated. Liquidity will move on to find some hot new thing. But I don’t think the AI revolution and data center buildout narrative is over, I just think that the tariff conversation has provided a temporary distraction.

TSSI is trading at the same stock price as it did in October of 2024, $7.34. In October of 2024, the most recent quarterly earnings report had $12.2 million of quarterly revenue, not $50 million like they just did.

In the absence of multiple expansion, a more than 50% growth rate is exceptional. Could multiples compress on growth like that? It’s always possible, but 1.1x price to sales seems pretty compressed already. It’s much more likely that not only with adjusted EBITDA grow 50%, but multiples will expand once again to reflect the future growth prospects as well as the future quality prospects as TSSI tries to take more recurring revenue from facilities management and data cluster maintenance contracts.

Growth traps are dangerous things, and TSSI was a dangerous growth trap when it was trading at $16 a share in February of 2025. But today at $7.34, I think TSSI is very cheap. It has all the standard tech problems, stock based compensation, adjusted metrics, etc. But very few tech companies have a multi-year contract to provide a safety net while they grow to fill the market from a position of relative safety.