Swiss engineer ABB boosted by data centre demand

By John Revill

ZURICH (Reuters) -ABB is seeing strong demand for electrical products used by data centres needed for artificial intelligence, the Swiss engineering group said on Thursday, as it reported quarterly profit slightly ahead of forecasts.

Data centres are being built around the world to concentrate the enormous computer power needed for AI.

The sites, which link thousands of chips together, are heavy consumers of electricity, leading to opportunities for companies like ABB which make electrical equipment to ensure reliable grid connections and manage energy usage.

ABB is receiving orders for products that supply uninterruptible power to data centres, Chief Executive Morten Wierod said.

"We believe we can help customers to redesign the next generation of data centres to reduce complexity, capex spend and become more energy efficient," he said.

Data centres were a big growth driver for ABB as it reported fourth-quarter operating earnings before interest, tax and amortisation (operational EBITA) up 8% to $1.43 billion.

The figure was slightly ahead of analysts' consensus forecast of $1.42 billion in a company poll.

ABB shares opened around 1.6% higher.

Still, rising use of Chinese AI startup DeepSeek could alter the data centre market, as its model appears to be more efficient and can achieve the same results for only a fraction of the same energy use. DeepSeek, a low-cost alternative to U.S. rivals, sparked a tech stock selloff on Monday as its free AI assistant overtook OpenAI's ChatGPT on Apple's App Store in the United States.

ABB's fourth-quarter sales rose 4% to $8.59 billion, beating the consensus forecast for $8.37 billion.

"Overall, the market conditions remain favourable, and it was good to end the year with comparable order growth of 7% in the fourth quarter," said Wierod.

The global data centre market is expected to grow 11.6% per year to reach $585 billion by 2032, according to Fortune Business Insights.

At ABB, orders for data centre-related products are rising at a double-digit percentage rate to become its fastest growing business, the company said.

Data centres now represent 15% of its electrification orders, up from 12% a year earlier.

For the year ahead, ABB said it expected to increase its comparable revenues by a mid single-digit percentage and improve its profit margin.

(Reporting by John Revill. Editing by Miranda Murray and Mark Potter)