ABB is a success story that nearly turned into a nightmare at the turn of the millennium. Growing too fast, too hard, and too high, the company came perilously close to collapse, before a brutal refocusing, which resulted in its workforce being halved between 1995 and 2005. ABB now concentrates on three divisions: Electrification, Motion, and Automation, i.e. sectors that perfectly match contemporary needs.
After years of restructuring, the Swiss-Swedish giant has established itself as an undisputed leader. Under the leadership of Björn Rosengren, ABB has restored its profitability and won over investors. While the group is poised to return to its historical highs, past efforts alone do not explain this meteoric rise.
The Golden Goose
Once again, AI is dictating the pace of industrial transformation. Powering data centers has become a major bottleneck. Demand is exploding In the US: the group's orders surged by 67% in Q1 2026. With delivery lead times of 12 to 24 months, the 22% growth in the order backlog provides solid visibility for future earnings.
According to the International Energy Agency, electricity demand from data centers is expected to more than double by 2030. As a supplier, ABB is set to capitalize on this trend. This is the same tailwind that has propelled Schneider Electric; the similarity in stock price movements between both companies over the past five years is striking.
In parallel, ABB's "Motion" segment saw its orders increase by 9%. Regarding Automation, growth is limited to 5%, although it is supported by robust demand in the maritime and port sectors.
The current momentum, however, should not overshadow a major challenge for the company.
The Price of Success
This is not a question of doubting the company's health or its results. However, investor attention must focus on ABB's valuation. The aforementioned restructuring has pushed margin expansion and cost streamlining to their limits. Market enthusiasm for the company's strategic position in the data center supply chain has done the rest.
The question now is what levers the company has left to pull. Revenue growth linked to AI infrastructure appears already priced in, while the potential for further optimization is limited. A P/E multiple of 27x is not necessarily a negative signal, but for an industrial conglomerate, the margin for error at this valuation level is virtually zero. Analysts expect EPS to plateau in the coming years, suggesting that the upside is largely priced into the share. What remains is its membership in the broader AI family, which moves mountains (and valuation multiples). This is the primary driver of share appreciation, all else being equal. Buying ABB at these levels is a bet on the continuation of a technological supercycle.
