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(Bloomberg) — Schneider Electric SE raised its sales and profit guidance after an artificial intelligence-driven spending spree drove unprecedented demand for its data-center equipment.
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The French manufacturer now expects organic revenue to expand this year by as much as 13%, compared with up to 10% in its previous forecast. It also hiked its target for organic growth in adjusted earnings before interest, taxes and amortization, and expects a stronger margin.
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A triple-digit surge in demand from data-center customers helped fuel a record second quarter, the company said Thursday. Core sales in the energy management division, which serves data center and grid infrastructure customers, increased by 18%, more than the 12% analysts expected.
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Technology giants have been splurging hundreds of billions on the AI data centers that use electrical and cooling equipment made by Schneider and its peers — including Switzerland’s ABB Ltd., Germany’s Siemens AG and US-based Vertiv Holdings Co.
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Schneider has also been developing data-center architecture directly with the likes of Foxconn and Advanced Micro Devices Inc., as surging power requirements in higher-density server farms force closer collaboration between chipmakers and infrastructure suppliers.
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High expectations fueled by AI demand can lead to volatility in the market. Vertiv shares plunged on Wednesday after second-quarter sales missed estimates, exposing a “high bar, not demand weakness,” according to Bloomberg Intelligence.
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Electrical system supplier GE Vernova Inc. also dropped this month after a “relatively modest” upgrade to guidance, according to Citi analysts, underwhelming investors.
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Schneider’s industrial automation segment, which specializes in factory software and digital transformation, reported sales growth of 11% for the second quarter, also ahead of expectations.
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The company is turning to acquisitions to drive expansion. After buying industrial AI firm Cognite for $3.1 billion last month, it’s in talks to acquire Shelly Group SE, a maker of smart home devices, in a deal valued at €1.3 billion ($1.5 billion).
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Shelly confirmed yesterday it was in preliminary discussions with Schneider on a potential tender offer for all shares of the Sofia, Bulgaria-based company. Schneider said Thursday it acknowledged Shelly’s statement and will not be commenting further.
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—With assistance from Sasha Draeger-Mazer.
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