ETN Q3 2025: Data Center Orders Surge 70% as Boyd Acquisition Boosts Liquid Cooling Exposure
ETN delivered a record quarter, driven by explosive data center demand and a transformative move into liquid cooling via the Boyd acquisition. Management’s bullish tone is grounded in unprecedented order momentum, expanding backlogs, and a clear strategy to deepen its data center portfolio. With secular AI and electrification trends accelerating, ETN positions for multi-year outgrowth, though pockets of vehicle and e-mobility weakness and integration execution will be key watchpoints heading into 2026.
Summary
- Data Center Acceleration: Orders in data center and hyperscale surged, reinforcing ETN’s AI-driven demand thesis.
- Portfolio Expansion: Boyd acquisition adds liquid cooling, positioning ETN as a full-stack data center solutions provider.
- Backlog Visibility: Record backlogs and robust book-to-bill ratios signal sustained multi-year growth runway.
Performance Analysis
ETN posted a record quarter across sales, profit, and segment margins, led by strength in Electrical Americas, Electrical Global, and Aerospace. Organic growth reached 7%, with data center sales up 40% and orders up 70% year-over-year, driving Electrical Americas to a 9% organic sales increase and a 20% backlog expansion. The aerospace segment delivered 13% organic growth and 150 basis points of margin expansion, supported by defense aftermarket momentum and platform wins.
While short-cycle segments like Vehicle and e-Mobility remained headwinds, management emphasized that these markets’ softness was more than offset by robust project pipelines and operational leverage in core growth businesses. Segment margin performance was particularly notable, with Electrical Americas hitting 30.3% and Electrical Global expanding 40 basis points despite inflationary pressure. Management reaffirmed full-year guidance, with Q4 expected to deliver a sharp reacceleration in organic growth and EPS.
- Data Center Demand Spike: Data center orders rose 70%, now representing the largest single vertical growth driver.
- Backlog Expansion: Total company backlog grew by $1 billion sequentially, with Electrical Americas contributing $600 million.
- Short-Cycle Weakness: Vehicle and e-Mobility segments declined, but represent a shrinking share of overall mix.
The quarter’s results underscore ETN’s ability to capitalize on secular electrification and AI infrastructure trends, while maintaining operational discipline and margin expansion across its largest segments.
Executive Commentary
"As we continue to deliver robust growth in data center market, our orders accelerated 70% and our sales were up 40% versus Q3 2024. This strong demand picture gives us confidence in our ability to deliver sustained growth and add value to shareholders."
Paolo Luiz, Chief Executive Officer
"Organic growth for the quarter was 7%, driven by strength in aerospace, electrical Americas, and electrical global, partially offset by weakness in short-cycle markets, including vehicle and e-mobility. Otherwise, organic growth would have been almost 10 percent."
Olivier Biodetti, Executive Vice President and Chief Financial Officer
Strategic Positioning
1. Data Center Ecosystem Leadership
ETN is rapidly evolving from a power management supplier to a comprehensive data center solutions provider. The Boyd acquisition, which brings $1.7 billion in expected 2026 sales at a 25% margin, adds liquid cooling—a critical enabler for next-gen AI chips—to ETN’s existing portfolio that spans power distribution, modular pods, and solid-state transformers. This positions ETN to capture greater share of wallet as customers consolidate suppliers for both “gray space” (infrastructure) and “white space” (IT rack) needs.
2. Order Momentum and Backlog Visibility
Unprecedented order acceleration and record backlogs underpin management’s multi-year growth confidence. Electrical Americas’ backlog is up 20% year-over-year, with book-to-bill ratios above one across all major segments. Management highlighted a 185% increase in mega project announcements over two years, with a 40% win rate on $4 billion in active negotiations, supporting durable demand visibility into 2026 and beyond.
3. Operational Scale and Expansion
ETN is executing a major capacity ramp, expanding 12 facilities in Electrical Americas to meet surging demand. Six plants are already operational, with another six under construction, supporting sequential growth and providing a buffer against supply chain volatility. Management noted over 100 basis points of inefficiencies tied to this ramp, but expects margin upside as new plants mature and integration synergies are realized.
4. Margin Management and Capital Allocation Discipline
Despite the scale of portfolio expansion, ETN maintained strict capital discipline in the Boyd deal, targeting accretion by year two and 200–300 basis points above cost of capital. The company expects to leverage purchasing power for cost synergies and avoid margin dilution from tariffs, while maintaining its credit rating. CapEx will peak in 2026 as the company completes its current wave of investments, then normalize as new capacity comes online.
5. Aerospace Platform and Aftermarket Strength
The aerospace segment continues to deliver on long-term targets, with double-digit growth and expanding margins fueled by defense wins, aftermarket momentum, and contract renegotiations. Management reiterated its path to 27% margins by 2030, with AI-driven supply chain and manufacturing initiatives contributing to near-term upside.
Key Considerations
ETN’s Q3 marks a decisive shift toward data center infrastructure leadership, but also highlights the complexity of scaling and integrating a rapidly expanding portfolio. Investors should weigh the following:
- Liquid Cooling First-Mover Advantage: Boyd’s deep engineering integration with chipmakers like NVIDIA positions ETN ahead of the curve as rack power densities outpace air cooling limits.
- Order Visibility Supports Growth Narrative: Record backlogs and a 1.1 book-to-bill provide multi-quarter revenue visibility, reducing cyclicality risk in core segments.
- Execution Risk in Integration: Scaling 12 new facilities and integrating Boyd’s global operations introduces complexity and temporary inefficiencies, with full margin benefits dependent on smooth execution.
- Short-Cycle Drag Remains Contained: Vehicle and e-Mobility weakness is notable but increasingly immaterial to consolidated performance as secular growth engines take precedence.
- CapEx Peak Nears: 2026 will mark a high point in capital spending, supporting future growth but requiring disciplined allocation as ETN absorbs recent acquisitions.
Risks
ETN’s growth thesis is heavily levered to data center, AI, and electrification trends, exposing the company to potential demand shifts, technology transitions, or capex pullbacks from hyperscale customers. Integration risk from the Boyd acquisition and the complexity of ramping multiple facilities could pressure near-term margins. Vehicle and e-Mobility softness, while currently manageable, could worsen if macro conditions deteriorate further.
Forward Outlook
For Q4, ETN guided to:
- EPS of $3.23 to $3.43, up 18% YoY at the midpoint
- Organic growth of 10% to 12%, a sequential acceleration
For full-year 2025, management reaffirmed guidance:
- Adjusted EPS of $11.97 to $12.17, representing 12% YoY growth at the midpoint
- Organic growth of 8.5% to 9.5%, likely at the low end due to vehicle/e-mobility drag
Management cited robust order pipelines, strong October orders, and ongoing capacity ramp as key drivers supporting the outlook. Integration of Boyd and continued margin expansion remain top priorities.
- Continued order acceleration in Electrical Americas and data centers
- Margin improvement as new facilities mature and cost synergies are realized
Takeaways
ETN’s results and strategic moves signal a step-change in its data center and electrification positioning, with secular tailwinds and record backlogs underpinning multi-year growth visibility.
- Data Center and Liquid Cooling Now Core Growth Engine: The Boyd acquisition cements ETN’s role as a full-stack data center infrastructure leader, with liquid cooling poised for 35%+ annual growth.
- Order and Backlog Momentum De-Risk Near-Term Growth: Book-to-bill ratios above one and expanding backlogs provide a buffer against short-cycle weakness and macro uncertainty.
- 2026 Will Test Integration and Margin Expansion: Investors should watch for execution on facility ramp, Boyd integration, and the realization of cost and revenue synergies as CapEx peaks.
Conclusion
ETN’s Q3 2025 results mark a pivotal quarter, with data center demand and the Boyd acquisition redefining its growth trajectory. While integration and execution risks remain, the company’s order book and strategic positioning offer a compelling case for sustained outperformance as electrification and AI infrastructure spending accelerate.
Industry Read-Through
ETN’s results reinforce the scale and urgency of AI-driven data center buildouts, with liquid cooling emerging as a critical bottleneck and opportunity across the electrical equipment sector. Competitors lacking a full-stack data center offering or deep chipmaker relationships risk losing share as customers consolidate suppliers. The aerospace aftermarket’s strength and defense platform wins also signal continued tailwinds for diversified industrials with exposure to secular trends. Rising CapEx and margin expansion in power management are likely to remain key differentiators as the industry navigates the next phase of AI and electrification investment cycles.