Initial earnings from ABB, GE Vernova, and Korea-based LS Electric point to a clear and accelerating trend: exceptionally strong order momentum across electrification and power infrastructure, driven primarily by data center demand and reinforced by powerful structural tailwinds.
Order intake across the sector has been particularly striking. GE Vernova reported a 71% year-on-year surge in orders to $18.3 billion, LS Electric’s backlog reached a record KRW 5.6 trillion (+45%, with transformer backlog alone up +91%), and ABB delivered $11.3 billion of orders, growing +24% organically and exceeding expectations by 16%.
These figures provide unprecedented revenue visibility through 2027 and beyond, especially given that demand for critical equipment such as gas turbines, transformers, and switchgear is unlikely to moderate in the near term. The global push to address the AI-driven power challenge—notably in the U.S., where multiple power plants and data centers are being launched or restarted—suggests that most regions will need to materially expand electricity generation capacity in the near future.
Policy developments are also reinforcing this trend. Earlier this week, Donald Trump invoked the Defense Production Act (DPA) to address vulnerabilities in the U.S. power grid, framing electricity infrastructure as a matter of national security. The DPA enables the government to prioritize domestic production of critical components and provide financial support to key industries, potentially accelerating the buildout of domestic manufacturing capacity for grid equipment.
While the immediate impact of the DPA may be limited, it signals a broader policy shift toward strengthening domestic supply chains, securing critical infrastructure, and accelerating investment in grid capacity—further underpinning the positive industry outlook.
Importantly, this strong order momentum is accompanied by sustained pricing power. Although some margin expansion is already visible in first-quarter results, the full impact is likely still ahead. Persistent shortages in turbines and transformers mean that pricing gains on recently signed contracts will only be fully reflected in earnings over the next few years. For instance, GE Vernova indicated that pricing on first-half orders is expected to be 10–20% higher than in the previous quarter.
As a result, current guidance upgrades may still prove conservative, and we see significant scope for further upside. In many cases, we believe that earnings across the power equipment sector could at least double over the next couple of years, supported by a combination of strong order backlogs, favorable pricing dynamics, and structural demand growth. Our Powering AI portfolio is delivering again an impressive performance this year (+42% YTD), but earnings upside could drive the performance much higher in our view.
