Schneider Electric lifts its 2026 targets again after AI data centers drive a record quarter

Schneider Electric raised its 2026 profit and revenue targets for the second time this year on Friday after demand from companies building AI data centers pushed its third-quarter sales to a record, though its shares slipped in Paris after opening higher.

A record quarter, carried by data centers

Schneider said third-quarter revenue rose to €11.46 billion, up 16.9% on an organic basis, which excludes currency swings and changes in scope such as acquisitions and disposals, and up 17.9% as reported. The company said it was its highest revenue for any quarter. Analysts had expected €11.13 billion, according to a consensus compiled by Schneider and cited by Reuters and Der Aktionär.

Energy Management, the unit that sells power distribution, backup power and cooling equipment, grew 18.8% organically to €9.62 billion. Industrial Automation grew 8.1% organically to €1.85 billion, held back by declines in process and hybrid automation that Schneider tied partly to weakness in China.

Data centers led the growth. Demand in Schneider's pure data-center segment rose by triple digits globally in the quarter, led by North America, while China and East Asia accelerated to a similar rate, the company said. Sales in that segment grew by what it called a strong double-digit rate, driven by prefabricated solutions, electrical distribution and protection, and cooling. Chief Executive Olivier Blum said the demand was "providing increasing visibility into 2027 and 2028." Schneider also said its order backlog reached another record at the end of the quarter.

Every region grew, and China stood out

North America, 40% of quarterly revenue, grew 19.9% organically to €4.64 billion. China and East Asia grew fastest, up 26.1% organically to €2.15 billion. Schneider said investment in AI infrastructure lifted several segments in China, led by data centers, while growth in East Asia came from data-center projects and semiconductor customers. Europe grew 8.6% organically and the South Asia and International region 13.2% organically.

Prices helped too. Product sales rose 17% organically. Systems were 35% of quarterly revenue and grew 22% organically; Software and Services were 17% and grew 7% organically. Chief Financial Officer Nathan Fast told analysts on the morning webcast that the value of Schneider's product price increases in the third quarter roughly matched what it had achieved in the entire first half, as increases taken earlier in the year reached their full effect.

The second target raise of 2026

Schneider now expects 2026 adjusted EBITA, its main measure of operating profit, to grow 18% to 21% organically, up from its previous range of 14% to 19%. It raised its organic revenue growth target to 12% to 14% from 10% to 13%, and expects its adjusted EBITA margin to widen by 100 to 120 basis points on an organic basis, to roughly 19.7% to 19.9%. Fast noted that the company began the year guiding to revenue growth of 7% to 10%.

The new revenue range still points to slower growth in the fourth quarter than the 15% organic pace of the first nine months. Asked about that on the webcast, Fast agreed and pointed to a tough comparison: the fourth quarter of 2025 was one of the strongest in Schneider's history. The company also cautioned that disruption in the Middle East could weigh on the fourth quarter by straining global supply chains and pushing up inflation.

Shares gave back early gains

The stock opened higher in Paris at €263.15 but reversed during the morning and traded at €253.80 at 11:05 a.m. local time, down 1.6% from Thursday's close, according to Google Finance data. It had already lost about 15% since Schneider announced its agreement to buy PTC on Oct. 5, Der Aktionär reported. Schneider agreed to pay about $22.6 billion in cash for PTC, an engineering and industrial-software company, according to the company's Oct. 16 release.

That deal is expected to close by the third quarter of 2027 and still needs approval from PTC shareholders and regulators. S&P Global Ratings and Moody's reaffirmed Schneider's A and A2 credit ratings on Oct. 6, the company said. Schneider had bought back €497 million of shares under a €600 million program as of Oct. 12 and plans to pause buybacks in 2027 and 2028.

The AI financing question

The results arrived during a week in which concerns about AI financing, and about who will pay for the technology, weighed on AI and semiconductor stocks. Twenty leading AI and semiconductor stocks lost more than $1 trillion in market value this week, and the spread on credit-default swaps tied to cloud-computing provider CoreWeave's debt briefly topped 1,140 basis points, CNBC reported.

On the webcast, a Morgan Stanley analyst asked how much of Schneider's business comes from so-called neocloud providers such as CoreWeave. The analyst said there was no reason to assume outsized exposure to any one group. Fast said data centers and networks made up 30% of revenue at the end of 2025, with direct data-center exposure about four percentage points lower, and that the share is likely to rise. He said Schneider does not break out hyperscalers, colocation operators and neoclouds, called the analyst's point "fair" and said he would not be more precise. Blum said the company has been "extremely careful" to pick customers that "will be there in the long term."