Eaton Corporation’s (ETN) stock rose last week. Shares of the Dublin-based power management company closed at $424.77 on September 18, a gain of about 7.9% over five trading days. The stock is now up close to 30% for the year, giving Eaton a market value of around $165 billion.
What drove the increase was Morgan Stanley’s 14th Annual Laguna Conference on September 16, where Eaton CEO Paulo Ruiz presented a stronger picture for the company’s data center business than most investors were expecting. His message caught Wall Street’s attention and caused several banks to lift their price targets.
Eaton plays a major role when it comes to building AI facilities. Ruiz highlighted how much revenue that role could deliver in the next few years.
Ruiz’s Laguna comments sparked a fresh look at Eaton
Ruiz, who took over as CEO in June 2025 after leading Eaton’s Industrial Sector and occupying senior positions at Siemens, walked investors through the company’s 2026 guidance history.
Eaton originally forecast 8% organic growth, raised the range to 9%–11% after first-quarter results, then lifted it to 11%–13% after the second quarter. At Laguna, Ruiz said Eaton is now targeting the high end of that current range and pointed to a “very strong” July and August performance.
“We see that the best years for this business are still ahead of us,” Ruiz told the audience, according to a transcript published by Seeking Alpha. He said he expects Eaton will have added roughly $10 billion in revenue in the past three years, between 2024 and 2026, or about 10 times the top-line growth of the prior decade.
“I’m really confident there’s a new Eaton taking place, because the strategy we have in place today is designed to do both top-line growth and margin expansion at once,” he added. Data center demand is responsible for most of that growth, with orders climbing about 85% and revenue rising roughly 65%.
Boyd Thermal, owned by Eaton, had its projected 2026 sales raised to $1.8 billion from $1.1 billion the previous year, a scale-up Eaton’s management tracks separately from the broader Electrical Americas’ (a major operating segment of Eaton) data center ramp.
How Eaton fits into the AI power buildout
Eaton makes the electrical equipment that carries power from the grid all the way to the chips inside AI servers. That includes switchgear, uninterruptible power supplies, busways, transformers, and now liquid cooling systems through the $9.5 billion Boyd Thermal acquisition that closed in March. Roughly 75% of Eaton’s revenue comes from its electrical segments, with the rest split between aerospace and vehicle businesses.
The company’s second quarter of 2026 set several records. Revenue increased 21% year over year to $8.53 billion, with adjusted earnings per share hitting $3.15. Segment margins came in at 23.1%, above Eaton’s own guidance, and orders and backlog climbed sharply across its Electrical and Aerospace business.
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Ruiz told investors at Laguna that the globally announced project pipeline Eaton is tracking has accelerated to 342 gigawatts, up from the 307 gigawatts management pointed to on the second quarter earnings call. That figure covers the industry-wide opportunity Eaton is competing for.
Eaton also announced a partnership with Trane Technologies in August to build integrated thermal and electrical systems for the NVIDIA Rubin DSX AI Factory Reference Design, giving it another shot at converting spending per project.
Wall Street is raising price targets
Analyst reaction to Eaton’s second quarter results and the Laguna remarks has been mostly positive. Baird initiated coverage with an Outperform rating and a $500 price target, stating that Eaton is still early in securing AI-driven orders, with cloud demand still making up most of data center sales.
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RBC Capital raised its target to $512 from $484 after Eaton’s earnings report and pointed to what it described as roughly 15 years of U.S. data center construction backlog. Evercore ISI upgraded Eaton to Outperform from In Line and raised its target to $502 from $453, citing lower execution risk and accelerating earnings.
BMO Capital moved to $487 and Citi to $485. Eaton has an average 12-month price target of $510 with a Strong Buy rating built on 10 buy calls and 1 hold recommendation, with no sell calls.
The risks investors should still weigh
Anyone thinking about buying the stock should consider a few things. Eaton trades at a P/E of 43, which is expensive for an industrial company that has historically traded closer to 20 times earnings. Much of that premium valuation reflects the AI outlook, so any pullback in hyperscaler spending would hit Eaton faster than rivals.
Ruiz also said 16 of Eaton’s 24 planned manufacturing facilities are now in the launch phase. He described the fourth quarter of 2025 and first quarter of 2026 as the most disruptive period so far. If margins fall during the remaining rollout, its earnings outlook might become uncertain for the rest of 2026 and into 2027.
Investors should also watch the planned Reverse Morris Trust separation of Eaton’s Mobility business that is supposed to close in the first quarter of 2027. The separation is designed so the company can focus on its higher-growth Electrical and Aerospace segments. These two segments sit closer to the AI and defense spending cycles that Eaton’s management expects to drive earnings for the next several years.
The safer approach for now is to observe order flow in the third quarter earnings report before adding money.
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