Eaton Corporation plc
Industrials · Electrical Components & Equipment
Structural read: ETN is the most direct large-cap pure-play on AI datacenter electrification. Every GW of hyperscaler capacity needs medium-voltage switchgear, busway, UPS, and PDUs - ETN is a top-3 supplier across all four. 1x for 8+ quarters.
- Datacenter end-market ~17% of revenue and growing 25%+; backlog visibility into 2027
- 12-quarter pricing power streak - operating margins expanded from 17% to 24% since 2020
- Reshoring + grid hardening + EV charging are independent multi-year tailwinds layered on top of AI
- $1.5B+ in announced US capex expansions (switchgear plants in TX/AR/SC) sized to hyperscaler demand
- Trades as industrial multiple despite tech-adjacent growth profile
- Datacenter exposure still <20% of revenue - hyperscaler capex pause hits sentiment harder than P&L
- Backlog growth decelerating from 30%+ to mid-teens - peak-rate-of-change risk
- Vehicle segment (ICE powertrains) in secular decline, ~15% drag
- Multiple has re-rated from 17x to 30x fwd P/E - priced like a tech name, still cyclical underneath
- Competition from $SU (Schneider) + $PH + Chinese switchgear OEMs on price
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