Eaton earnings outlook lifts shares as AI data-center demand holds up

Eaton earnings outlook gave investors a cleaner read on the AI data-center buildout after a rough stretch for the hardware trade. Shares rose Friday after the power management company reported record second-quarter revenue and profit that topped Wall Street estimates, according to LSEG data cited by CNBC.

Revenue for the quarter ended June 30 climbed more than 21% from a year earlier to $8.53 billion, above the $8.13 billion analysts expected, according to LSEG. Adjusted earnings per share rose nearly 7% to $3.15, also a second-quarter record and ahead of the $3.07 consensus estimate.

The stock had entered the print under pressure. CNBC reported that Eaton shares were about 17% below their late-June highs as of Wednesday’s close, caught in selling across AI-related hardware names. Rival Vertiv also weighed on sentiment after reporting a weaker quarter that it attributed to temporary supply-chain issues.

Why did Eaton shares jump after earnings?

Investors reacted to two signals: Eaton’s electrical businesses are still seeing strong orders, and management raised its outlook. Eaton sells power equipment used in data centers and on the electric grid, so its results are read as a check on whether AI-related construction is still translating into real industrial demand.

The company’s combined electrical businesses posted 18% organic growth and 27% total growth, CNBC reported. Organic growth means sales growth excluding the effects of acquisitions and currency moves. Segment margins were 24.5%, while orders rose 38% over the past 12 months and pushed the electrical sector’s book-to-bill ratio to 1.2 times.

Book-to-bill compares new orders with completed shipments. A reading above 1 means a company is taking in work faster than it is delivering it, which usually builds backlog.

Electrical Americas reported record revenue and operating profit, with 18% organic growth. Chief Financial Officer David Foster said on the company’s call that the pipeline of negotiations was up 60% year to date versus the prior-year period, according to CNBC. Orders for the unit rose 41% over the past 12 months, the book-to-bill ratio reached 1.3 times, and backlog ended the quarter up 33% at $3.8 billion.

Electrical Global also hit records for revenue and operating profit. Sales rose 44% from a year earlier, including 18% organic growth, a 25% contribution from the Boyd Thermal acquisition and a 1% benefit from foreign exchange, CNBC reported. Backlog in that segment more than doubled from a year earlier.

What Boyd Thermal adds to Eaton

Eaton completed its acquisition of Boyd Thermal in March, adding liquid-cooling technology used to manage heat in high-performance computing environments. The company raised its full-year sales estimate for Boyd to $1.8 billion from $1.7 billion and now expects the acquisition to add $1.5 billion to revenue, up from $1.4 billion previously.

CEO Paulo Ruiz said on the investor call that he would be “shocked” if Boyd did not beat that higher target, noting that it exceeded the company’s second-quarter estimate by 20%, according to CNBC. Ruiz also said Boyd’s scale gives it an edge over smaller liquid-cooling rivals and pointed to its aerospace background as useful experience for data-center customers.

Eaton also pointed to a larger data-center opportunity ahead. CNBC reported that total U.S. data-center backlog has reached 307 gigawatts, equal to about 15 years of work at 2025 build rates, up from 12 years in the prior update. Only about 20% of that backlog is expected to convert near term, with most deliveries tied to 2028 and later.

For 2026, Eaton now expects organic growth of 11% to 13%, up from a prior 9% to 11% range and above the 10.5% consensus estimate from FactSet. Adjusted EPS is expected to land between $13.40 and $13.60, compared with the prior $13.05 to $13.50 range and the $13.24 estimate cited by FactSet.

The company’s current-quarter view also came in ahead of expectations. Eaton projected organic growth of 13.5% to 15.5% and adjusted EPS of $3.46 to $3.56, compared with consensus estimates of 11.7% growth and $3.50 in adjusted EPS, according to FactSet data cited by CNBC.

This story draws on original reporting from CNBC.