Prysmian, the world's largest cable manufacturer, raised its full-year profit forecast on Tuesday after reporting second-quarter earnings that topped its own internal expectations. The Milan-based company now expects full-year adjusted EBITDA of €2.8 to €2.9 billion, up from its previous range of €2.63 to €2.78 billion.
The upgrade comes as data center operators around the world race to expand capacity, driving demand for the high-voltage cables and fiber-optic lines that Prysmian specializes in. The company said its second-quarter adjusted EBITDA rose 20.7% to €730 million, ahead of the €721 million consensus it had set internally.
What is adjusted EBITDA?
Adjusted EBITDA is a measure of profitability that strips out the effects of interest, taxes, depreciation, and amortization, as well as one-time items like restructuring costs or legal settlements. It gives investors a clearer view of a company's underlying operating performance by removing non-cash charges and irregular expenses.
For Prysmian, the metric is closely watched because it reflects the cash-generating power of its cable-making operations before accounting for the large capital investments needed to build new factories or upgrade equipment.
Why data centers matter for cable makers
Data centers are the physical facilities that house the servers, storage systems, and networking equipment that power cloud computing, artificial intelligence, and streaming services. As companies and consumers generate ever more data, these centers need to expand — and that requires massive amounts of cabling.
Prysmian supplies both the power cables that bring electricity into data centers and the fiber-optic cables that connect servers within them. The company noted that data center customers are placing large, forward-looking orders, signaling confidence in continued growth.
The trend is not unique to Prysmian. Other companies tied to data center construction have also reported strong demand. Keppel reported a 25% profit jump on infrastructure and AI data center demand, while Advantest surged 12% on a 93.8% profit jump as Japan's chip gear makers benefited from the same wave.
What this means for investors
Prysmian's upgraded forecast is a positive signal for investors in the broader data center supply chain. When a major supplier like Prysmian raises its outlook, it suggests that demand is not just strong but sustainable enough to support higher production volumes and pricing.
However, investors should be aware that cable manufacturing is capital-intensive. Prysmian must invest heavily in new capacity to meet demand, which can weigh on free cash flow in the short term. The company's ability to convert its higher earnings into cash returns for shareholders will be a key metric to watch.
The profit upgrade also highlights the growing importance of data center infrastructure as a driver of industrial demand. While much of the attention around AI and cloud computing has focused on chip makers like Nvidia and AMD, companies that build the physical backbone of the digital economy are also seeing a significant boost.
For everyday investors, Prysmian's results serve as a reminder that the data center boom extends beyond semiconductors. Cable makers, cooling system providers, and construction firms are all benefiting from the build-out. Diversifying exposure across the supply chain can help capture gains from multiple angles.
What to watch next
Investors will be watching Prysmian's order backlog and capital expenditure plans when the company reports full-year results. The key question is whether the demand from data centers is a cyclical upswing or a structural shift that will last for years.
Prysmian's management has signaled confidence in the latter, but the company faces risks from rising raw material costs, particularly copper and aluminum, which are key inputs for cable production. Copper has overtaken iron ore as the top profit driver for miners Rio Tinto and BHP, reflecting strong demand from electrification and data center projects.
If copper prices continue to rise, Prysmian may need to pass on costs to customers or accept thinner margins. The company's ability to manage input costs while maintaining its growth trajectory will be a key factor for its stock performance.
