ABB CEO’s View for More Data Centers Fails to Offset AI Jitters
(Bloomberg) — ABB Ltd. top executive expects a step up in data center demand, though the prospect for more growth wasn’t enough to counter concerns about rising costs and volatility in the artificial intelligence sector.
“We see absolutely no slowdown, more of an acceleration in our numbers,” particularly when looking at the order backlog, Chief Executive Officer Morten Wierod said Tuesday during a third-quarter earnings a conference call.
ABB has a current order backlog of $32 billion, Chief Financial Officer Christian Nilsson added. Shares in the industrial automation supplier and maker of electric components still slid as much as 6.7%, the most since April 2025. Peers Siemens AG and Schneider Electric SE also fell by more than 4% Tuesday.
A decline in net income and higher non-operating expenses overshadowed record orders driven by the boom related to the global rollout of power-hungry data-centers. ABB outlined minor foreign exchange hedges, and costs related to its robotics unit divestment.
The share drop also comes after concerns over the trajectory of the boom in demand related to artificial intelligence rattled markets. The Swiss factory automation firm makes the transformers that enable power grids to supply the centers’ substantial energy needs.
For ABB, comparable orders in the third quarter jumped 40% to $12.1 billion, the Swiss manufacturer said Tuesday. That beat an average analyst estimates of $11.4 billion.
“We are very early on the AI adoption both when it comes to industries but also as individuals,” said Wierod. “That will only accelerate in the coming years so therefore there will also be more infrastructure needed.”
Orders for electrification components were the third quarter’s key growth engine, accounting for 70% of new business. The motion business grew by 14% while automation was stable.
Citigroup’s Martin Wilkie said that while the order beat points to further upside for 2027 and 2028, “we’d see an improvement in market sentiment on the broader AI theme as necessary to drive the shares higher.”
Separately, the company is pushing on with acquisitions, setting up a joint venture with Mitsubishi Electric Corp for a low-voltage power distribution business in Japan. ABB will pay around $495 million for a 51% stake in the unit.
ABB is part of a slew of companies making acquisitions that benefit from the build-out of data centers and demand for artificial intelligence software. French competitor Schneider Electric SE earlier this month agreed to buy PTC Inc. for $22.6 billion to add engineering software for automotive and other industries.
ABB also made a small upward tweak to its revenue forecast and now sees comparable revenue growth in the ”low teens” range. Previously it said revenue might rise in the low double-digit to low teens range.
It generated $1.6 billion in third-quarter free cash flow despite higher capital spending with the firm indicating it’d be disciplined on spending.
“In the current strong market environment it is essential to maintain focus and discipline,” the company said in a statement. ABB is seeking to keep a lid on spending through incremental capacity expansions, more productivity through automation and only using third-party assembly some of the time.
Capital expenditure is trending higher at around $1 billion, though the company doesn’t expect this to rise in the medium-term.
Earlier this year ABB bought British industrial components company Rotork Plc for an enterprise value of around $5.5 billion to expand its electrification and automation businesses, its biggest ever acquisition. Wierod has said ABB has a pot of $13 billion available for additional purchases.
Wierod has streamlined ABB’s portfolio since taking over nearly two years ago to tap into burgeoning investment in data centers and utilities underpinning the AI boom. The company last year sold its robotics division for more than $5 billion.
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