Four of Europe’s oldest industrial groups have added more than €150bn to their market caps on the back of soaring demand for data centres driven by the boom in artificial intelligence.
European makers of everything from switches to smart meters are providing the servers and infrastructure that power data centres for large language models and cloud computing, with traditional makers of electric equipment such as Legrand doubling their revenues thanks to data centres in recent years.
“We’re not putting $70 or $80bn on the table like Microsoft and Meta,” said Franck Lemery, chief financial officer of Legrand. “[But] we [provide] the components and our business is growing relative to that [spending].”
“The sexy part of AI is led by American companies,” said Alex Cordovil, an analyst at Dell’Oro. “But, with some exceptions, the nuts and bolts of the infrastructure are dominated by European players.”
Investors have spotted the potential. Since the launch of ChatGPT in November 2022, the market valuations of Schneider Electric, Siemens AG, ABB and Legrand — four of the leading European groups in the sector — have grown a combined €151bn, rising more than 60 per cent in the case of German-listed Siemens AG.
The groups continue to provide electrics to residential buildings and industrial groups. But data centres are their fastest-growing source of revenue, driven by the volume of computing power required by AI models, as well as gaming, cloud computing and streaming.
That focus has also exposed them to large share price swings, including during a market rout earlier this year triggered by the launch of Chinese large language model DeepSeek, which its makers say was developed with less processing power. Investors are also concerned about the constraints on grid systems and power supplies, according to Cordovil.
But groups including Legrand have brushed off concerns, pointing to the long-term trend of higher demand for data processing — Dell’Oro expects total capital expenditure on data centres to increase from almost $600bn in 2025 to more than $1tn by 2028.
“All the turbulence is relative. We’re very, very confident about the promise of our portfolio,” added Lemery. “We have to live with these ups and downs.”
Schneider Electric
Schneider Electric has been a leading provider in the data centre sector since the $6.1bn acquisition of American Power Conversion in 2006, putting it in pole position to benefit from soaring demand for electricity.
Data centres accounted for about 24 per cent of its orders in 2024, an increase from 23 per cent in 2023 and 19 per cent in 2022, according to the company.
The APC deal was initially judged expensive by investors but it enabled the group to move into the market for critical power services, which includes generators needed to ensure uninterrupted power supplies to data centres.
Schneider is valued at €127.9bn, overtaking French oil major TotalEnergies last year in a sign of the world’s shift from fossil fuels to electricity.
The company range from software to monitor data centre infrastructure, racks to store servers and cooling systems to prevent high-powered processing facilities from overheating. Last year, it acquired a 75 per cent controlling interest in Motivair, a specialist in liquid cooling, for $850mn.
This would help it serve customers such as Nvidia, whose servers for its most powerful AI chips would require the more efficient water cooling process rather than air, said Schneider chief executive Olivier Blum at the company’s annual general meeting.
AI had become a “fundamental change of paradigm for the IT and electric infrastructure required”, he added.
Legrand
Like Schneider and Siemens, French maker of sockets and cables Legrand dates back to the 19th century. In the 1900s, it started making light switches from porcelain and wood products, then the best-known insulators of electric currents.
Still based in its historic headquarters of Limoges, Legrand has in recent years pivoted towards data centres, orders for which made up 20 per cent of sales in 2024, double the rate in 2019.
“It could represent more, by 2030, between 20 and 25 per cent, we’ve not given a proper target. We’re very confident that it’s a vertical that is . . . going to continue to grow strongly in the next few years,” said Lemery.
The group has made 10 small acquisitions in the past year, six of which have been in the area of data centres.
But Legrand, like its industrial rivals, operates an export model with a high number of US clients that has left it exposed to Trump’s tariffs. This month, chief executive Benoît Coquart said 50-60 per cent US tariffs on Chinese goods could cost the company up to $200mn this year.
ABB
Swedish-Swiss electrical company ABB makes everything from robotics to power generators but in recent years its sales have skewed towards data centres.
Morten Wierod, the company’s chief executive, said that ABB was “working with many of the world’s largest data centre operators to ensure they have safe, reliable and energy efficient technologies to manage their increasing energy needs”.
In 2024, data centre orders made up 15 per cent of the $16.4bn in orders in ABB’s electrification unit, compared with about 9 per cent two years earlier. Electrification represents nearly half of ABB’s $33bn in annual revenue. Between 2019 and 2023, data centre orders grew at an average annual rate of 24 per cent, accelerating further in the past year as the AI race has intensified.
ABB’s offerings for data centre operators include ensuring availability and increasing energy efficiency as well as acting like backup batteries for entire facilities. Its systems providing reliable power are greener than traditional diesel generators, the company says.
But the company’s exposure to hyperscalers has led to stock market fluctuations, including after reports that Microsoft had cancelled some leasing contracts. The US is its largest market in terms of revenue for electrification, at about 50 per cent.
Siemens AG
German conglomerate Siemens has a smaller focus on data centres but it has increased spending on infrastructure for the technology as it seeks to catch up on competitors like Schneider Electric.
“Siemens and ABB have been focused on other areas and now they’re bringing their capabilities to bear over the past three years,” said William Mackie, an analyst at Kepler Cheuvreux.
The company’s overall data centre business, which has fuelled the German manufacturer’s recent growth, rose more than 45 per cent to about €1.3bn in the first half of the fiscal year.
But the Munich-based company has seen some hurdles to this growth, blaming a pause in data centre orders from one “hyperscaler customer” for a 16 per cent reduction in orders on electrical products such as microgrid controllers.
