Eaton revenue hits record as AI data center demand accelerates

Eaton Corporation reported record third-quarter revenue of $8.95 billion on Tuesday, beating market estimates and signaling strong demand for electrical infrastructure. The 28% year-over-year increase surpassed the LSEG consensus of $8.51 billion. Adjusted earnings per share rose 20% to $3.68, also exceeding the expected $3.54.

The results underscore Eaton's role in the artificial intelligence buildout. Data center revenues grew 65% during the quarter, driven by needs for power and cooling. CEO Paulo Ruiz attributed this surge to increased manufacturing capacity and the acquisition of Boyd Thermal. Eaton purchased Boyd Thermal for $9.5 billion, a deal that closed in March. The acquisition added liquid-cooling technology to Eaton's portfolio.

Ruiz stated that Boyd Thermal is already delivering results. The unit generated nearly triple-digit year-over-year growth in its second full quarter under Eaton ownership. As a result, Eaton raised its full-year revenue outlook for the Boyd business to $1.9 billion, an increase of $100 million. Ruiz described Boyd as a key accelerator for the Electrical Global segment.

Core electrical segments also showed momentum. The combined Electrical Americas and Electrical Global units achieved 24% organic growth in the third quarter. Operating margins for these segments expanded by 1.9 percentage points to 26.4%. Order growth accelerated to 43% on a rolling 12-month basis. This activity increased the company's backlog by 46% to over $20 billion.

Eaton raised its full-year 2026 guidance. The company now projects organic growth of 13% to 15%, up from a previous range of 11% to 13%. The adjusted EPS forecast was increased to $13.70 to $13.80. For the fourth quarter, Eaton expects organic growth of 13% to 15% and adjusted EPS of $4.05 to $4.15.

The company anticipates no end markets will decline in 2027. Double-digit growth is expected in data centers, distributed IT, and commercial aerospace. These sectors currently represent about one-third of sales. That proportion is expected to rise after Eaton divests its Mobility business in early 2027.

The Mobility unit will be sold through a Reverse Morris Trust transaction in the first four months of 2027. Analysts view the quarter as a potential bottom for the stock. Announced U.S. data center projects have reached 366 gigawatts, up from 307 gigawatts three months ago. Eaton's backlog and leading indicators suggest continued growth in this sector.

Shares climbed nearly 7% in afternoon trading to reach $391. The stock remains below its August peak of approximately $460. The Aerospace segment missed revenue estimates for the second consecutive quarter, though operating profit still surpassed consensus. The results provide a clear signal of demand durability for electrical infrastructure.