Key Points
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Hyperscaler capital spending could exceed $1.3 trillion in 2027.
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Eaton supplies essential electrical infrastructure for AI data centers.
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Strong orders and growing backlogs support Eaton’s growth outlook.
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Six of the world’s largest hyperscalers are projecting capital expenditures exceeding $1.3 trillion in 2027. That’s up from an estimated $870 billion in 2026 and $470 billion in 2025. And while companies the Microsofts, Amazons, and Alphabets of the world are spending enormous sums building artificial intelligence infrastructure, there’s an industrial company positioned to benefit from that spending before the AI systems even start generating revenue.
That company is Eaton (NYSE: ETN), which manufactures the electrical equipment needed to operate data centers. And with AI infrastructure spending accelerating, its business is already seeing substantial growth.
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AI needs electricity before it needs customers
AI data centers require enormous amounts of electricity, which must be distributed, controlled, protected, and delivered reliably to thousands of servers operating around the clock. Eaton supplies much of the equipment needed to accomplish that, including switchgear, circuit breakers, power distribution systems, and backup power equipment. To be sure, these aren’t optional purchases. Without adequate electrical infrastructure, a data center can’t operate.
Eaton also benefits from customers upgrading existing facilities to accommodate more powerful AI servers, which require considerably more electricity than traditional computing equipment. And unlike hyperscalers, Eaton doesn’t need to demonstrate that AI subscriptions, advertising, or cloud services will eventually justify spending in the billions. It generates revenue by selling the equipment needed to build the infrastructure.
These aren’t just projections
Eaton’s Q3 2026 results show just how strong demand has become. Revenue reached a record $8.9 billion, up 28% year over year, including 19% organic growth. Its Electrical Americas segment generated $4.2 billion in revenue, representing 22% organic growth, and operating profit reached $1.2 billion, with an impressive 29.8% operating margin.
Meanwhile, the segment’s rolling 12-month average organic orders increased 39%, and its backlog grew 33% from the previous year. Eaton’s Electrical Global business also reported strong results, with revenue climbing 58% to $2.7 billion, helped by acquisitions and organic growth. And companywide free cash flow reached $1.03 billion for the quarter.
Make no mistake: These aren’t projections based on what AI might eventually become. They’re actual financial results supported by customers already spending money.
Eaton doesn’t need every AI investment to succeed
There are risks, of course. If hyperscalers discover that AI infrastructure isn’t generating sufficient returns, they could reduce future capital expenditures. That would eventually affect Eaton’s orders. That said, Eaton also serves several other markets, including utilities, aerospace, industrial facilities, and commercial buildings. So its growth isn’t exclusively dependent on AI.
Still, I like Eaton’s position in the AI infrastructure market. While hyperscalers are committing hundreds of billions of dollars today in hopes of generating attractive returns tomorrow, Eaton is already selling the equipment those companies need. So if you’re looking to capitalize on AI infrastructure spending without relying entirely on the eventual profitability of AI services, Eaton is a great place to start.
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Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Eaton Plc, and Microsoft. The Motley Fool has a disclosure policy.
