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Siemens Energy AG’s Chief Executive Officer Christian Bruch has a message for investors worried about surging spending on data centers: Don’t fear a bubble.
“So far, we see reservations more or less one to one converting into effective orders,” Bruch said Wednesday on Bloomberg Television. “I’m relatively comfortable going forward that this power will be needed.”
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While Wall Street has grown skeptical about software stocks exposed to disruption from the artificial intelligence boom, makers of hardware used in data centers look more insulated. Siemens Energy earlier Wednesday reported a jump in orders fueled in part by investors pouring money into data centers needed for the growing use of AI.
The German manufacturer makes transformers and circuit breakers needed by the centers, while larger sites often require their own power plant, fueling demand for gas turbines. Siemens Energy’s gas business booked its highest-ever order intake in the fiscal first quarter, putting the company on track for another year of rising revenue.
The shares rose as much as 6.5% in Frankfurt. The stock has gained nearly a third since January, making it the best performer in the German DAX Index this year.
Source: Bloomberg
Last week, Siemens Energy said it will invest $1 billion in the US, its largest single market, to expand production capacity for gas turbines and grid products. The country accounted for 40% of Siemens Energy’s gas turbine orders in the first quarter.
That move is meant to help alleviate bottlenecks in the supply chain, with gas turbines ordered today often not delivered until closer to the end of the decade, Bruch said.
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“Execution of all that backlog will be a significant stretch to the industry,” he said. “It’s also about the construction companies, civil companies — we will have to see over the next 12 to 24 months how do we grow this industry faster.”
Still, all that demand is bolstering Siemens Energy’s earnings. Profit more than doubled to €1 billion in the first quarter amid improvements at the grid technology business and productivity increases at wind unit Siemens Gamesa.
While the division’s orders slumped 34%, Siemens Energy pointed to an exceptionally strong prior-year period, when it booked a €1.4 billion offshore wind turbine deal. In the US, where the governments actions have hit demand for new onshore projects, the company is focusing on repowering existing sites, the CEO said.
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Siemens Energy also confirmed its guidance for 2026. It still expects Gamesa to break even this fiscal year.
With a strong first quarter and continued order momentum, Siemens Energy’s guidance “now looks conservative,” RBC Europe analysts led by Colin Moody said in a note.
— With assistance from Guy Johnson, Anna Edwards, and Tom Mackenzie
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