Forget Tech Stocks: The Industrial Company That's Supplying Every AI Data Center

Core Insights - Eaton's $4.3 billion business in electrical products is crucial for managing power in data centers, which are essential for the functioning of artificial intelligence [1][4]. - The company is focusing on data center construction and has recently acquired Boyd Thermal, a $1.5 billion business specializing in liquid-cooling technology for data centers [4]. - Eaton's sales increased by 10% and adjusted earnings rose by 8% in Q3 2025, with a backlog growth of 51% over the past two years, indicating strong future growth potential [5]. Company Overview - Approximately 75% of Eaton's revenue is derived from electrical products, with the remainder coming from automotive and aviation sectors [2]. - The company's offerings are designed to manage power, which is increasingly vital as global electricity demand rises [3]. Financial Performance - Eaton's stock has seen a price-to-earnings ratio of 33x, slightly above its five-year average of 32x, indicating that the stock may be considered expensive by value investors [6]. - Despite being 15% below recent highs, the stock's price-to-sales and price-to-book value ratios are also above long-term averages [6]. Investment Considerations - Eaton is viewed as a strong investment opportunity, particularly for aggressive growth investors who see potential in the expanding AI market [7]. - A significant pullback of 25% could present a more attractive buying opportunity for investors [7].