ABB at the Centre of the Electrification Boom

Data center infrastructure has become ABB's most prominent growth driver. Around a quarter of the world’s data centers rely on ABB equipment, from medium-voltage systems to backup power and cooling infrastructure. Data center rack densities are expected to rise significantly in the years ahead, driving an increase in energy demand. ABB is at the forefront of this shift, having entered into a partnership with Nvidia to support 800-volt direct-current architecture for next-generation gigawatt-scale AI data centers. 

The company recently launched HiPerGuard medium-voltage uninterruptible power supply (UPS) has already secured multiple contracts, each exceeding $100 million each (ABB Q4 2025 Results). Analysts’ estimate that ABB's data center power revenues could grow at 14–16% annually through 2029, with the high-capacity UPS segment expanding at roughly 30% compound annual growth rate (CAGR) (Bloomberg, 02.2026).

However, ABB's exposure to electrification extends beyond data centers. Grid modernization, building efficiency and transport infrastructure are all contributing to sustained demand. Electrification currently accounts for approximately half of ABB's revenue and has the highest profit margins within the group, with management targeting 22–26% EBITA for the segment (ABB Q4 2025 Results). 

The current results reflect a transformation that has been underway for several years. ABB has consistently divested itself of lower-return activities, including selling its Power Grids division to Hitachi, spinning off the Accelleron, and most recently selling its robotics division to SoftBank for $5.4 billion. These exits have allowed ABB to focus capital on electrification and automation where growth and profitability are highest.

The robotics exit is particularly telling. Rather than competing on a large scale in a market where 70% of installations are Asia, ABB chose to step away and redeploy capital to areas where growth and profitability are the highest. This divestment removes ABB's lowest-margin segment and generates approximately $5.3 billion in net cash proceeds. The result is a company generating returns well above its historical levels. Return on capital employed (ROCE) reached 25.3% in 2025, and strong cash generation supports a new $2 billion share buyback alongside continued acquisitions (ABB Q4 2025 Results).

The valuation is not cheap, and the market expects continued delivery. ABB currently trades at approximately30x trailing earnings and 19–20x EV/EBITDA, a 40–50% premium to its own five-year average. This premium reflects a stronger portfolio and long-term growth potential, but it leaves limited room for disappointment.

The most meaningful near-term risk is ABB's dependence on continued investment from hyperscalers in AI infrastructure. Although AI infrastructure spending from companies such as Amazon, Microsoft and Google remain large, any pullback in their capex plans would directly impact ABB's fastest-growing segment. 

ABB enters 2026 with strong momentum and significant exposure to electrification and AI infrastructure, two of today’s most capital-intensive investment themes. Vontobel offers a range of leverage products with ABB as underlying, allowing investors to take both long and short exposure depending on their own view.