Eaton Sees Best Years Ahead as Data Center Demand Powers Growth

Eaton raised its 2026 organic-growth outlook to as much as 12% and is targeting the high end of its third-quarter and full-year guidance, supported by strong electrical-market demand, record backlogs and capacity improvements. The company is expanding its data-center portfolio through acquisitions such as Fibrebond and Boyd. Data-center revenue rose about 65%, orders increased 85%, and Boyd’s projected 2026 revenue was raised to $1.8 billion. Eaton is positioning for next-generation AI infrastructure, including 800-volt DC systems, solid-state transformers, power electronics and liquid cooling. Management said electrical revenue expectations through 2030 could exceed the current $31 billion target.

Chief Executive Officer Paulo Ruiz told investors at Morgan Stanley’s Laguna Conference that the company’s strategy is gaining momentum, supported by strong electrical-market demand, manufacturing capacity additions and a portfolio increasingly focused on data centers and aerospace. Ruiz said Eaton initially forecast 8% organic growth for 2026, later raised that outlook to 10%, and most recently said it could achieve 12%. He said the company had a “very strong” July and August and was targeting the high end of its existing guidance ranges for the third quarter and full year.

“We see that the best years for this business are still ahead of us,” Ruiz said. He contrasted Eaton’s prior decade, when revenue grew by roughly $1 billion while margins improved, with the last three years, during which the company expects to add $10 billion in revenue.

Eaton has been expanding capacity across 24 facilities, with 16 now in ramp-up phases, according to Ruiz. He said the company experienced the greatest disruption from those projects in the fourth quarter of the prior year and the first quarter of 2026, but production rates have since improved.

In Electrical Americas, revenue per day rose 25% in the second quarter compared with January of the prior year, Ruiz said. He added that the business increased revenue about 16% over five quarters, including an 8% sequential increase from the first to second quarter. Ruiz said pricing actions taken in April and August, along with selective backlog repricing, should support price-cost trends. Record backlogs and continued end-market strength also provide a favorable foundation looking toward 2027, he said, while declining to provide formal guidance for that year. Additional factors expected to affect the 2027 setup include Boyd beginning to count as organic growth in the second quarter of next year and Eaton’s planned separation of its Mobility business through a Reverse Morris Trust transaction with Dana. Ruiz said both developments are expected to help growth and margins.

Ruiz said Eaton deployed $13 billion in capital on acquisitions and portfolio actions, concentrating on data centers and aerospace. The company plans to continue pursuing bolt-on activity, particularly in electrical markets, but does not expect to undertake acquisitions as large as Boyd over the next couple of years. The CEO highlighted acquisitions including Resilient Power, Fibrebond and Boyd as examples of Eaton’s effort to broaden its data-center offering. Fibrebond provides modular power infrastructure, which Ruiz said can address skilled-labor shortages, cut construction time and potentially free space inside data-center buildings for revenue-generatin...