Eaton raises outlook as AI data center demand supports growth

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Eaton raises outlook on AI demand

Highlights

Eaton reports Q2 revenue up 21% year over year to $8.53 billion and adjusted EPS of $3.15, both beating analyst expectations.
The company raises full-year organic growth guidance to 11%-13% and adjusted EPS forecast to $13.40-$13.60, above prior estimates.
U.S. data center backlog grows to 307GW (15 years at 2025 build rates), underpinning Eaton’s shift toward higher-margin power and thermal management markets.

Results and guidance point to stronger demand

As reported by CNBC, Eaton says second-quarter revenue for the period ended June 30 rises more than 21% year over year to a record $8.53 billion, ahead of the $8.13 billion analyst consensus compiled by LSEG. Adjusted earnings per share increase nearly 7% to $3.15, also above the $3.07 expected, and the stock moves higher after the release.

The company lifts its full-year outlook for organic growth to 11% to 13%, up from 9% to 11%. Eaton also raises the midpoint of its adjusted EPS forecast, now expecting $13.40 to $13.60 for the year versus a prior range of $13.05 to $13.50, ahead of the $13.24 estimate cited by FactSet.

For the current third quarter, Eaton projects organic growth of 13.5% to 15.5%, topping the 11.7% consensus estimate. Management also increases its estimate for Boyd’s annual sales to $1.8 billion from $1.7 billion previously, with the acquisition now expected to contribute $1.5 billion in revenue rather than $1.4 billion.

Data center backlog and portfolio shift support outlook

Investor concern had built before the results as Eaton shares had fallen about 17% from late June highs by Wednesday’s close, reflecting broader selling across the AI hardware trade and weakness after rival Vertiv reports a disappointing quarter tied to temporary supply chain issues. Eaton’s update addresses that pressure by signaling that demand for its electrification and power products is still increasing.

Chief Executive Paulo Ruiz says he would be “shocked” if the company does not exceed the higher guidance for Boyd, noting the business beats the second-quarter estimate by 20%. He says Boyd’s scale as a leader in liquid cooling gives it an advantage as data center customers expand infrastructure needs.

Eaton says total U.S. data center backlog has grown to 307GW, equal to 15 years of backlog at 2025 build rates, up from 12 years in its last update. While only about 20% of that backlog converts in the near term, the company says the larger share of deliveries is expected to translate into revenue in 2028 and beyond, improving visibility on future sales.

The company also continues to reshape its portfolio around higher-margin businesses tied to the data center buildout. In June, Eaton agrees to combine its mobility division with auto parts maker Dana in a deal valuing the unit at $5.1 billion, a move that supports its shift away from a slower business and toward faster-growing power and thermal management markets.

Our earlier coverage of American Electric Power’s Longview coal plant acquisition explained how surging electricity demand from AI data centers is reviving competition for reliable generation assets once slated for retirement. We noted that AEP outbid a data center developer to secure the 710MW facility to help meet rising PJM load, underscoring how AI infrastructure is reshaping power-market priorities and local policy debates.

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