Eaton delivered an excellent quarter on Friday, reinforcing our view that the AI data center buildout remains alive and well. The power management company also raised its sales outlook to reflect a bigger-than-expected contribution from a recent acquisition. Revenue for the second quarter ended June 30 increased over 21% year-over-year to a record $8.53 billion, ahead of the LSEG compiled analysts’ consensus estimate of $8.13 billion. Adjusted earnings per share (EPS) rose nearly 7% to $3.15, a second-quarter record. That’s better than the $3.07 expected, according to LSEG. Shares rose on the release, but fell from their highs of the day as oil and bond yields advanced. ETN 1Y mountain Eaton 1-year stock performance Bottom line Eaton investors had good reason to be concerned heading into earnings. As of Wednesday’s close, shares were roughly 17% below their late June highs, swept up in the heavy selling across the AI hardware trade. In addition, one of its rivals, Vertiv , issued a disappointing quarter this week that it blamed on temporary supply chain challenges, which added to Eaton’s declines. But Eaton ripped higher in Thursday’s session as the AI trade rallied after a levered hedge fund was forced to unwind some of its positions. That improved sentiment extended into Friday, but only modestly. The onus was still on Eaton to show that the recent sell-off was unwarranted. The company, whose electrical equipment is used inside data centers and across the grid, certainly delivered. Demand for Eaton’s best-in-class electrification and power solutions is increasing, and its acquisition of Boyd Thermal, completed in March, adds liquid cooling to the mix. During the conference call with investors, management raised its estimates for Boyd’s sales for the year to $1.8 billion from the $1.7 billion previously forecast. The addition is now expected to contribute $1.5 billion to the topline, up from $1.4 billion previously. CEO Paulo Ruiz said he would be “shocked” if the company doesn’t overdeliver on that raised guidance, noting it beat the second-quarter estimate by 20%. One competitive advantage, Ruiz said, is Boyd’s size. As the market leader for liquid cooling, it can scale much quicker and more efficiently than its smaller peers, he said. Boyd “cut their teeth; they developed their pedigree in aerospace,” Ruiz said. “So it is very, very stringent conditions technically, where failure is not an option. So they bring that DNA to the data center environment.” That added exposure to the data center, both strategically and financially, couldn’t have come at a better time. Total U.S. data center backlog has grown to 307GW, or 15 years of backlog at 2025 build rates, up from 12 years in our last update. Only roughly 20% of this backlog converts near term. The majority of deliveries will translate into revenue in the 2028 and beyond timeframe. That’s a positive because it means revenue is more predictable further out into the future, Ruiz said….
Read More: Eaton jumps as its earnings and outlook signal hope for the AI buildout