Eaton Raises 2026 Outlook as Data Center Orders Hit Record Backlog

Eaton Corporation shareholders watched their investments climb nearly 7% in afternoon trading on Tuesday after the company announced record third-quarter results. The stock reached $391, a recovery from recent lows though it remains below its August high of approximately $460. The surge reflects strong demand for the electrical gear used in new artificial intelligence facilities.

The manufacturer reported total revenue of $8.95 billion, marking a 28% increase from the same period last year. This figure exceeded the consensus estimate of $8.51 billion tracked by LSEG. Adjusted earnings per share also came in higher than predicted, rising 20% to $3.68 against an expected $3.54.

Growth in the data center division drove much of this performance, with revenue in that sector jumping 65% for the quarter. Management attributes this spike to expanded manufacturing capacity and the integration of Boyd Thermal, a liquid-cooling firm Eaton acquired for $9.5 billion in March. CEO Paulo Ruiz noted that Boyd generated nearly triple-digit growth in its second full quarter under new ownership. Consequently, Eaton increased its full-year revenue outlook for the Boyd unit by $100 million to $1.9 billion.

Core electrical operations also showed strength. Combined revenue for the Americas and Global electrical units grew 34% in total, with organic growth reaching 24%. Operating margins for these segments expanded by 1.9 percentage points sequentially to 26.4%. Order volume accelerated to a 43% increase on a rolling 12-month basis.

This surge in orders pushed the company's backlog to more than $20 billion, a 46% year-over-year jump. The accumulation indicates that new business is coming in faster than factories can currently ship products.

Based on these figures, Eaton raised its full-year 2026 guidance. The company now projects organic growth between 13% and 15%, up from a previous range of 11% to 13%. The adjusted EPS forecast was lifted to between $13.70 and $13.80, surpassing the LSEG estimate of $13.61. For the fourth quarter specifically, Eaton expects organic growth of 13% to 15% and adjusted EPS of $4.05 to $4.15.

Looking toward 2027, Eaton does not anticipate declines in any of its end markets. Double-digit growth is expected in data centers, distributed IT, and commercial aerospace. These sectors currently account for about one-third of sales, a share that will rise after the company divests its Mobility unit in early 2027 via a Reverse Morris Trust transaction. While the Aerospace segment missed revenue estimates for the second straight quarter, its operating profit still beat consensus due to better-than-expected margins.

Analysts point to the durability of demand for electrical infrastructure, noting that announced U.S. data center projects have reached 366 gigawatts, up from 307 gigawatts three months ago. Eaton's expanded backlog and raised guidance position it to benefit from this continued expansion through the coming years.