Schneider Electric, the French energy-management and automation giant, has lifted its 2026 profit growth outlook, citing booming demand from data centers. The company now expects its adjusted EBITA — a measure of profit before interest, taxes, and amortization — to grow between 14% and 19% in 2026, up from its previous guidance. However, it also warned that currency fluctuations could shave €400 million to €500 million off its reported revenue.
What is driving the upgrade?
Schneider Electric is a key supplier to the data center industry, providing the less flashy but essential equipment that keeps servers running: power distribution systems, cooling units, and server racks. As cloud providers and tech companies race to build out new data centers — especially those needed for artificial intelligence workloads — demand for Schneider's gear has surged.
The company's first-half results already reflected that strength. Adjusted EBITA rose sharply, and the upgraded 2026 target signals management's confidence that the boom has legs. Other companies in the data center supply chain have also reported strong demand. For example, Prysmian recently lifted its profit forecast on similar trends, and Keppel posted a 25% profit jump driven by AI-related data center infrastructure.
The currency headwind
Not everything is rosy. Schneider flagged that a stronger euro relative to other currencies — particularly the U.S. dollar and emerging-market currencies — will weigh on its reported revenue. This is a common challenge for European multinationals: they earn revenue in many currencies but report in euros, so when the euro strengthens, those foreign earnings are worth less when converted back.
The €400-500 million drag is a significant number, but it is a non-operational factor. It does not reflect the underlying health of the business. Investors should focus on the organic growth and profit improvement, while keeping an eye on currency trends that could affect reported earnings per share.
What it means for investors
For everyday investors, Schneider's upgraded outlook is a clear signal that the data center buildout is still accelerating. The company's products are essential infrastructure, not discretionary purchases, which gives its revenue stream some resilience even if the broader economy slows.
However, currency risk is real. If the euro continues to strengthen, Schneider's reported results could look weaker than the underlying business. Investors in European exporters should monitor currency markets alongside company fundamentals.
The broader context is also important. The data center boom is part of a larger trend: the electrification of everything, from AI computing to electric vehicles to renewable energy. Schneider is well-positioned in all these areas. But competition is fierce, and other players like Advantest in chip testing and Samsung in AI chips are also riding the wave.
What to watch next
Investors will be watching Schneider's next quarterly report for signs that the growth is sustainable. Key metrics include order backlog, new data center contracts, and the pace of capacity expansion. Currency moves will also be in focus, especially if the euro continues to strengthen against the dollar.
The company's ability to pass on higher costs to customers will be another factor. If inflation in raw materials or labor persists, margins could come under pressure. But for now, the data center tailwind looks strong enough to offset those concerns.
Schneider's upgraded guidance is a positive sign for the entire data center supply chain. It suggests that the AI-driven infrastructure buildout is not a short-term fad but a multi-year trend that will benefit a wide range of companies, from electrical equipment makers to chip manufacturers to cooling system providers.
