Schneider Electric Generates 21% of its Revenue From Data Centers and Networks. The Profiteer of the AI age is Close to its 52-Week High!

Schneider Electric (860180) is one of the stocks at the 52-week high that should be on the watch list due to the data center boom and the expansion of the energy infrastructure. Kepler upgraded the stock from Hold to Buy with a target of €250 (€previously 168), as a cyclical recovery is expected from the second half of the year and the company is on board with various megatrends. There are also rumours  that the company is interested in Bentley Systems, which specializes in engineering software.

What you need to know is that Schneider Electric already generates 21% of its revenues in the Data Center & Networks segment. It specializes in solutions for building, upgrading and retrofitting data centers that are also fit for the AI age. In addition to the physical infrastructure of data centers, the company also offers uninterruptible power supplies, infrastructure management in data centers, rack systems and integrated cooling systems. At the same time, the company helps to keep energy consumption as low as possible. Demand is also expected to be very strong in 2024, with the addressed market growing by over 10% p.a. until 2027.

The market for data center infrastructure will expand very strongly over the next few years. UBS predicted earlier this year that infrastructure spending will grow from $25.8 billion to $195 billion by 2027 - fueled by trends such as GPU cloud and AI edge computing as well as strong demand for AI training and inference. Schneider Electric will be one of the top European beneficiaries. Against this backdrop, EPS is also likely to expand from €8.42 to €12.07 by 2027. It makes sense to follow new pro-cyclical signals for the share.

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