French electrical distributor Rexel has once again raised its full-year sales growth target, citing booming demand from US data-center construction and Europe's push to electrify everything from cars to heating systems. The company said third-quarter sales rose 11.4% year over year, accelerating from earlier in the year and prompting management to lift its outlook for the full year.
Rexel now expects sales growth of about 7% for 2025, up from its previous target of around 5%. The upgrade marks the second time this year the company has raised its guidance, a sign that the tailwinds behind its business remain strong even as other parts of the global economy show signs of slowing.
What's driving the growth?
Two main forces are behind Rexel's momentum. First, the rapid buildout of data centers in the United States. Tech giants and cloud providers are pouring billions into new facilities to support artificial intelligence and cloud computing, and those buildings need vast amounts of electrical equipment—cabling, switchgear, lighting, and climate-control systems. Rexel, as one of the world's largest distributors of such products, is a direct beneficiary.
Second, Europe's electrification push. Governments across the continent are encouraging the switch from fossil fuels to electricity, whether through electric vehicles, heat pumps, or renewable energy installations. That trend is creating steady demand for the kind of electrical components and systems that Rexel supplies.
Over the first nine months of the year, Rexel's sales rose 7.3% to €15.44 billion. The United States was the standout, with sales up 10.7% to €6.08 billion, while Europe grew a more modest 3.2% to €7.15 billion. The regional split shows how much of the growth is coming from the US data-center boom, but Europe's electrification is providing a solid, if slower, base.
Why the guidance matters
For investors, a company raising its guidance is usually a positive signal—it means management sees stronger demand ahead than they previously expected. Rexel's decision to lift its full-year sales growth target to about 7% (from roughly 5%) suggests that the company believes the current momentum will continue through the rest of the year.
The company also reaffirmed its target for adjusted EBITA margin, a key profitability measure. While the brief doesn't specify the exact figure, the fact that Rexel is confident enough to raise sales guidance while holding its margin target suggests that the growth is coming without sacrificing profitability.
This is not the first time Rexel has raised its outlook this year, which underscores the durability of the demand drivers. In an environment where many industrial and construction-related companies are warning of softness, Rexel's resilience stands out.
What it means for investors
For everyday investors, Rexel's update is a useful reminder that not all parts of the economy are slowing. The data-center boom, fueled by the AI race, is creating real, sustained demand for physical infrastructure—not just software and chips. Companies that supply the nuts-and-bolts of that infrastructure, like Rexel, are seeing the benefits in their sales figures.
It also highlights the long-term trend of electrification. As governments and businesses move away from fossil fuels, the demand for electrical equipment is likely to grow for years. That's a structural shift that could benefit a wide range of companies, from manufacturers to distributors like Rexel.
However, investors should keep in mind that Rexel's stock has already rallied significantly this year, and the market may have priced in much of the good news. The company's ability to keep beating expectations will be key to further gains. Also, any slowdown in data-center spending or a pullback in European electrification incentives could quickly change the picture.
For context, other companies in the electrification and data-center space have also been reporting strong results. For example, Nebius recently secured a $3.5 billion credit line to fund AI data centers, and Schneider Electric, a major electrical equipment maker, also raised its guidance despite a trimmed price target from BofA. These moves point to a broader trend of strength in the electrical infrastructure space.
On the other hand, not every company is enjoying such tailwinds. Lam Research, a semiconductor equipment maker, saw its shares slide after guidance flagged supply-chain and China drag, showing that even tech-adjacent sectors can face headwinds.
The bottom line
Rexel's raised guidance is a clear sign that the demand for electrical equipment remains robust, driven by two powerful forces: the AI-fueled data-center boom and Europe's electrification push. For investors, it's a reminder that some companies are thriving even as the broader economy cools. But as always, it's important to look beyond the headline numbers and consider the risks, including valuation and the potential for a slowdown in these key demand drivers.
