The Surprising Winners of the AI Boom: Not Just Big Tech

• AI-driven demand doubles data center revenue for top European industrial firms to €20B.  
• Schneider Electric leads in data center growth with 17% revenue from secure power division.  
• Power supply delays challenge AI’s impact on data center expansion, despite growing demand.

Bloomberg reports that the growth of artificial intelligence (AI) is significantly boosting revenue for some of Europe’s biggest industrial companies. While global manufacturing demand weakens, particularly in Asia and North America, companies like ABB Ltd, Siemens AG, Legrand SA, and Schneider Electric SE are seeing an increase in orders for data center infrastructure.

In the past year, the six largest electrical companies saw their data center revenues reach €20 billion ($22.2 billion). This figure has shown a doubling of revenue compared to five years ago, indicating a strong growth trajectory in the sector. 

Redburn Atlantic analyst James Moore predicts sales will keep growing by about 15% annually through 2027. This growth is not limited to just European firms; US companies like Vertiv Holdings Co. and Eaton Corp Plc are also benefiting from the AI-driven demand.

Data centers have become essential to these industrial giants’ revenue, with Schneider Electric particularly exposed to this market. Schneider’s secure power division, responsible for hardware and software for data centers, gets 17% of its revenue from this sector.

Notably, Schneider’s liquid cooling technologies, which efficiently manage temperatures in high-density data centers, are gaining traction. Pankaj Sharma, the executive vice president of Schneider Electric’s secure power division, noted the alarming growth in demand for data center infrastructure, comparing it to previous technology booms like e-commerce and Bitcoin mining.

Despite the enthusiasm surrounding AI, some challenges remain. Siemens’ CEO, Roland Busch, highlighted the ongoing growth in data processing needs, which continues to drive demand for electrification. 

Despite this, the electrification market appears to be entering a super cycle, according to Siemens, as the need for power and data processing keeps increasing. As companies closely tied to AI and data centers continue to grow, they may persuade investors of their ability to exceed cautious expectations for 2024 and 2025.