Schneider Gains Visibility Into 2028 on Data-Center Boom

Schneider Electric SE raised its outlook again as soaring data-center demand extended visibility into 2027 and 2028, easing concerns that the AI infrastructure boom may be losing momentum.

Data centers were “exceptionally strong with another quarter of triple digit demand growth,” Chief Financial Officer Nathan Fast said on a call with investors.

The French manufacturer of electrical equipment now expects revenue to grow as much as 14% this year on an organic basis, topping its prior 10% to 13% guidance. It also raised guidance for adjusted earnings before interest, taxes and amortization, as well as its margin outlook.

“We’re confident that the end markets are still there to continue to deliver on that guidance,” Fast said, noting that triple-digit order growth is beginning to convert into revenue, with much of the backlog scheduled for delivery in 2027 and 2028.

Data centers are set to account for a larger share of Schneider’s sales as booming demand boosts the business, said Fast. Data Center & Networks accounted for about 30% of orders at the end of the last fiscal year, a figure he expects to increase when the company updates it at year-end.

Demand within its data-center business was led by North America, while growth in China and East Asia accelerated to a similar pace.

In China, that strength has persisted “quarter after quarter,” Chief Executive Officer Olivier Blum said on the call, adding that “this level of growth could continue at least across 2027.”

China was a key positive surprise as faster AI investment boosted the data-center and semiconductor businesses, according to RBC analysts led by Mark Fielding. Schneider’s outlook may be cautious, “and as such the upper end of the guide range looks very achievable,” they said.

Concerns about a slowdown in AI spending have sparked market volatility as investors question how long the investment boom can last. Chip stocks slumped on Thursday after Anthropic PBC disclosed third-quarter revenue of $16.8 billion to prospective investors – with the pace of growth slowing from earlier in the year and falling short of investor expectations.

Technology giants have been investing hundreds of billions in AI data centers that use electrical and cooling equipment made by Schneider and its peers — including Switzerland’s ABB Ltd., Germany’s Siemens AG and US-based Vertiv Holdings Co.

“Our strategy related to the acquisition of PTC is obviously to build the industrial intelligence layer and energy and industrial intelligence layer,” Fast said, referring to the company’s $22.6 billion deal to transform itself into a leading software and AI business. “Bridging the physical to digital is absolutely critical.”

Availability of power and grid infrastructure could pose a potential constraint, Fast said, though the company isn’t seeing those issues affect its order book or customer discussions.

Customers typically secure land and power before their projects enter Schneider’s order book, Fast added, giving the company visibility early in the development cycle.

Third-quarter sales rose 16.9%, the strongest increase since 2021 and ahead of even the highest estimate, driven by triple-digit growth in data-center demand, including for prefabricated systems, power backup and cooling equipment.

Schneider said the conflict in the Middle East may impact earnings in the fourth quarter due to potential for pressure on global supply chain and inflation. The company expects price increases to offset higher raw-material and tariff costs in fiscal 2026.