CMSC has released a research report noting that major overseas power equipment firms such as GEV, Siemens Energy, Hitachi, and ABB have recently disclosed their latest quarterly financial results. New orders for electrification businesses have maintained a high growth rate overall, primarily driven by demand for power infrastructure from markets in Europe, the Americas, the Middle East, and Asia-Pacific, with AI-related power infrastructure serving as a key catalyst.
Global grid investment is in an upward cycle, and AI data centers (AIDC) are steepening the growth curve. The firm recommends focusing on companies that have gained a foothold in overseas markets by entering the localized operational phase, or those deeply embedded in the supply chains of major global companies.
Key Points from CMSC:
Cloud businesses of overseas CSPs continued to grow strongly in Q2 2026, with year-on-year revenue expansion across the board. Enterprise-level AI demand is both real and broad. Capital expenditure remained robust, also rising significantly year-on-year in Q2 2026, with Google, Amazon, and Meta all raising their full-year guidance.
Most leading overseas power equipment companies reported improving operational indicators for their electrification businesses in Q2 2026. GEV, Siemens Energy, Hitachi, Hyundai Electric, Mitsubishi Electric, ABB, and Eaton all saw revenue growth of over 20% year-on-year in their electrification segments. Operating profit margins generally trended upward year-on-year; for example, Hyosung Heavy Industries' operating margin increased by 4.3 percentage points year-on-year, driven by a higher contribution from high-margin products like US transformers and circuit breakers.
New orders for the electrification businesses of these overseas leaders maintained a high growth rate in Q2 2026, with data centers being a significant driver. However, constrained by capacity and delivery capabilities, order backlogs continued to accumulate.
1) New Orders: GEV, Hitachi, Hyosung Heavy Industries, Hyundai Electric, and ABB all achieved rapid growth in new electrification orders in Q2 2026, with GEV and Hitachi both seeing year-on-year growth exceeding 90%. Over the past year, the quarterly growth rate of new orders for these overseas leaders has generally accelerated, mainly benefiting from grid expansion and upgrades in Europe and the Americas (where data centers are a key driver) and new grid construction in the Middle East and Asia-Pacific.
2) Specifics: Hitachi's capital expenditure is increasingly shifting towards its electrification business. The key growth driver for Hitachi Energy's orders is large HVDC projects, with data centers still accounting for a smaller portion. GEV's data center orders exceeded $50 billion in the first half of 2026. Siemens Energy saw order growth across all business areas, with transformers contributing the most, including demand from data center-related projects. Hyundai Electric's management stated that supply for North American transformers has begun to be negotiated three years in advance, indicating potential demand exceeding current contract volumes. Hyosung Heavy Industries' high-margin orders for North American grid equipment continue to expand. Mitsubishi Electric's strong order intake is primarily driven by the expanding application of renewable energy and increased investment in data centers. ABB's electrification business, which focuses on medium and low-voltage switchgear, saw data center orders maintain triple-digit growth, while orders for other electrification products also continued to grow at a double-digit rate. Eaton's Electrical segment reported data center orders up approximately 85% year-on-year. Schneider Electric saw triple-digit growth in data center demand within its order book.
3) Order Backlogs: The ratio of orders on hand to trailing twelve-month (TTM) revenue for Hyosung Heavy Industries, Siemens Energy, GEV, and Hitachi's grid business was 4.0, 3.9, 3.7, and 3.1 times, respectively, showing an expanding trend that reflects intensifying order backlogs.
Orders for colocation providers (Colo) and EPC companies have also surged, with power infrastructure becoming a key constraint. New orders for Colo companies like DLR and EQIX grew significantly year-on-year, with backlogs reaching record highs. The backlogs for EPC firms such as PWR and FIX have also hit record highs, with visibility often extending to 2027-2028. Given the lengthening delivery schedules for power equipment and tight supply of technical personnel, EPC companies are operating in a favorable pricing environment.
Risk Reminder: Risks include lower-than-expected AIDC capital expenditure, rising raw material prices, and trade barriers.
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