Eaton (ETN): Reindustrialization Through Data, DC Power, And Aerospace

An important economic shift is the so-called 4^th industrial revolution, centered around artificial intelligence (AI), generalized electrification, smart automation, and interconnected cyber-physical systems. It follows the three previous industrial revolutions (steam, electricity, computers), and promises to be as transformative for the global economy.

This also means that companies that have moved on early in providing key machines and tools for this era are benefiting greatly from investment and building of new capacity in these fields. This does not just mean AI companies, but also companies building the hardware for data centers, the power infrastructure for electrification, the switches and controllers for smart factories, etc.

One such company is Eaton, a company that started more than a century ago to benefit from the then-new and booming trucking industry. Since then, the company has become a giant in mobility, aerospace, and electric systems.

Eaton Overview

Eaton’s History: Expansion Through Acquisitions

Eaton was founded in 1911 by Joseph O. Eaton and his associates to manufacture and commercialize a patented internal-gear truck axle, as the Torbensen Axle Company. When Josen Eaton bought back the shares of his partners in 1923, he renamed the company the Eaton Axle and Spring Company and listed it publicly on the NYSE.

During the Great Depression, the company started to produce aircraft parts, valves, and precision engine components, before opening its first international factory in Canada in 1937. This line of business provided diversification to the company and growing revenues during World War II.

After the death of its founder in 1949, the company started a series of acquisitions of large component manufacturers like Fuller Manufacturing (1958) and Yale & Towne Manufacturing Co. (1963) in a bid to consolidate the industry.

Renamed the Eaton Corporation in 1971, the company then entered the electrical component and power management market through the historic acquisition of Cutler-Hammer (power control and switching devices), a company that had notably designed the electrical control equipment for the Panama Canal.

Cutler-Hammer also brought extra technology in the aerospace segment, including the advanced radar jamming countermeasure systems for Rockwell’s B-1 bomber and building the precise microwave landing systems utilized by NASA for the Space Shuttles.

In the 1980s, Eaton acquired Kenway (a pioneer in robotic warehouse storage and automated guided vehicles) to deepen its expertise in the manufacturing and automation segment.

The cash flow from these new activities provided the financing for the acquisition of Westinghouse’s distribution and control business unit in the early 1990s.

In 1998, Eaton fully abandoned its legacy truck axles business to focus on other vehicle components with higher margins like hydraulics, differentials, valves, and brakes, which had the added bonus of sharing IP and manufacturing know-how with the aerospace department of the company.

The presence in the electrical component market expanded with the 2012 acquisition of Cooper Industries for $11.8B, an American electrical products and tools manufacturer.

In the 2020s, Eaton moved to capture more of the booming market for data centers with several acquisitions:

• Tripp Lite in 2021 for $1.7B, to instantly secure a dominant footprint in data center edge computing, single-phase uninterruptible power supplies (UPS), and server racks.
• Fibrebond Corp in 2025 for $1.4B, to scale its capacity in modular, prefabricated infrastructure. Rather than waiting years to build a concrete facility, data center operators began buying Eaton’s plug-and-play modular power skids.
  • The company also invested a further $242M in its Arkansas factory to double production of Fibrebond customized electrical enclosures.
• Boyd Thermal in 2026 for $9.5B, a thermal management giant which added liquid cooling capabilities directly to Eaton’s product line, resolving a major hurdle for AI infrastructure.
• COL Group in 2026 for €810M, to add medium-voltage, sulfur hexafluoride (SF₆)-free switchgear and grid automation to its European utility and hyperscale offerings.

Eaton By the Numbers

Through more than a century of operation and growth, Eaton became a major multinational with a focus on products critical for the 4^th industrial revolution’s supply chain, or as the company’s slogan claims:

“We make what matters work”

The company has 97,000+ employees in 180 countries, of which 10,000+ engineers & scientists work in 6 corporate innovation centers in the United States, China, India, Ireland, and the Czech Republic. The IP portfolio of the company includes 16,700 patents globally, thanks to steady investment in R&D and capex ($12B since 2015) and the establishment of 200+ technology partnerships. This resulted in products using innovative materials like silicon carbide in power backups or lighter 3D-printed aircraft components.

Eaton manufacturing footprint is spread over 216 manufacturing facilities in 36 countries, with a total of 1,190+ corporate subsidiaries & entities, of which 210+ are in the USA.

While the corporation’s global headquarters is located in Dublin, Ireland, it is still the historical operational and administrative co-headquarters in Cleveland, Ohio, that manages the North American market distribution.

On the financial side, the company generated $27.4B in sales in 2025, of which around half came from the electrical segment in the USA, and another quarter from the electrical segment in the rest of the world.  Organic sales growth was 8% in 2025 + 2% growth from acquisitions. This generated a total of $4.5B in cash flow from operations, which partially financed the $13B in acquisitions in 2025.

Source: Eaton

This represents a major shift in the company’s product mix, with today’s Eaton almost entirely driven by the electrical segment. The next segment is aerospace, and together they make up more than 90% of total profits.

Source: Eaton

Earnings per share for 2025 were a record $10.45, up 10% over 2024; segment margins of 24.5% for 2025 were a record. The company expects revenues to keep growing rapidly, reaching $38B by 2030.

Source: Eaton

The company’s stock (+ reinvested dividends) has outperformed the overall market, as well as the S&P 500 Industrial index since 2020. In large part, this is thanks to Eaton’s more concentrated exposure to data center construction capex (see below).

Source: Eaton

Supporting this financial performance has also been the dividend distribution: the company started paying dividends in 1923 when it first publicly listed, and has never stopped since, making it one of the rare companies in the world with more than a century of dividend payment track record. It has steadily risen from $1.10/share in 2013 to $4.16/share in 2025.

Source: Eaton

Eaton’s Businesses

Electrical Systems

This is by far the largest and most important segment of Eaton business lines, responsible for around 3/4^th of total revenues and profits.

It is among the top 4 large global players in the worldwide low- and medium-voltage electrical industry, with the strongest distribution network in North America. It is also the market leader for applications in harsh and hazardous environments.

In this field, a few categories of products can be mentioned. The first one is circuit protection devices: switches, circuit breakers, fuses, switchgear, etc. They are fail-safe devices that automatically cause a disruption in an electrical circuit when they recognize an excess and unsafe load of power in a circuit, an essential component of any electrical system.

Source: Eaton

Another big segment for Eaton is direct DC power (in opposition to AC power). This is becoming a key upgrade for data centers and other power-hungry facilities, especially as microgrid and solar energy become more common.

“DC power distribution reduces energy losses by simplifying the power path. In traditional systems, electricity is converted multiple times from alternating current (AC) to DC and back before it reaches equipment; each conversion introduces inefficiency. By minimizing these AC-to-DC conversion steps, DC systems improve reliability and reduce installation effort. ”

In the electrical segment, data center and commercial sectors are the largest sub-sections. In data centers specifically, orders in Q2 2026 were up approximately 85% and revenue up approximately 65% versus 2Q25.

This explosion in sales is largely tied to power grids being unable to deliver the required power to new data centers, making microgrids and energy storage that much more attractive.

Source: Eaton

For the future of the company, an important technology will be solid-state transformers and high-power 3-phases uninterruptible power supply (UPS), both becoming a must-have for data centers and overall power distribution.

Meanwhile, Eaton is also helping utilities harden the grid by selling its products to leading distribution utility infrastructure and digital edge control solutions.

The company also recently launched its xStorage battery energy storage system in North America to accelerate electrification and decarbonization.

“The xStorage BESS provides an environmentally friendly backup, reducing reliance on traditional generators with its 250 to 1000 kWh of usable stored energy. Additionally, it enables efficient solar self-consumption by storing excess energy from on-site sources like solar panels”

Aerospace

Besides electrical systems for power supply, Eaton is a market leader in hydraulics, motion control, airframe fuel, and airframe pneumatics.

With $3.7B of sales in 2025, the sector is not the largest in Eaton, but still a massive activity in its own right, and puts the company among the top 3 players in this sector.

These aerospace systems are installed in both civilian and military aircraft, including helicopters. A large installed base enables a strong aftermarket sales and services position for stable income in the future.

In parallel, many new military platforms are providing future growth opportunities to Eaton (T-7Q, CH-53, FLRAA, etc.), especially as the US military fleet is aging and needs replacement for much of its equipment in the next two decades, especially for designs often as ancient as those first made in the 1960s and 1970s, which cannot be fully modernized further.

Source: Eaton

Lastly, a small but potentially growing niche is satellites, with Eaton’s proportional flow valve technology used in satellite electric propulsion feed systems.

Vehicles & eMobility

The vehicles segment has mostly been built over legacy equipment from the initial Eaton company, and includes parts like brakes, clutches, differentials, fuel systems, and valves.

Another product more aligned with the rest of the company’s expertise is megawatt-charging stations, extremely high-power electric charging stations for commercial vehicles, notably heavy trucks.

“Megawatt charging refers to the delivery of high-power DC charging directly to the EV battery, bypassing the onboard charger. Commercial fleet operators require faster charging solutions to maintain operational efficiency and to electrify long-haul trucking schedules. MW charging can address these needs by enabling rapid recharging, minimizing downtime and making electrified commercial vehicles more practical.”

As the logistics sector electrifies, this will likely become a major growth theme for Eaton as well, and bring the vehicle segment closer to the rest of the conglomerate.

eMobility includes products for EVs like intelligent power electronics, power systems, and advanced power distribution and circuit protection.

Source: Eaton

This is for now a very small portion of the whole company, but Eaton’s management envisions revenue opportunities for this business between $2B and $4B by 2030, potentially making it as large as the current aerospace segment.

Eaton’s Future

Eaton current business and future growth are supported by four separate secular trends tied to the 4^th industrial revolution, but also shifts in geopolitics like the push for more localized production and secure supply chains:

• Digitalization: AI and cloud computing demand, with the expected automation of a significant part of the current labor market.
• Electrification: a still ongoing process for individual cars and barely started for commercial networks and logistics. It also includes the electrification of heating away from fossil fuels, as well as industrial processes like metallurgy, chemical production, etc.
• Sustainability, with the rise of solar power, microgrids, and gigawatt-scale energy storage all using more DC power systems and associated power management devices.
• Reindustrialization: as geopolitical tensions explode, the world is pivoting back to in-country manufacturing and localized supply chains.

Eaton’s Investment Case

Eaton’s Pros

With its strong position in areas of actively reindustrializing regions like the USA and Europe, Eaton is well positioned to benefit from this trend. The very strong presence in electrification in general, and DC medium- and low-voltage systems in particular, is a valuable asset, as this technology is increasingly popular for integrating renewables into existing power systems despite their intermittency.

The same DC technology and UPS backups are also increasingly popular in data centers, which are more and more reliant on isolated microgrids as the general power grid struggles to provide enough energy to newly built facilities.

Lastly, a serious opportunity exists in the eMobility market and megawatt-scale charging stations as more and more car and truck manufacturers switch their product line toward electric designs.

Meanwhile, the aerospace segment is growing steadily, providing cash flow to the rest of the company, and is well positioned to benefit from an expansion of US military spending, especially the renewal with new models and expansion of the aircraft fleet.

Eaton’s Cons

The recent successes of Eaton in the data center construction business also make it extremely vulnerable to the cash flows and overall success of the AI sector. If funding were to slow down or the demand for compute revealed to be less than expected, the resulting decrease in capex would directly hurt the business of companies providing the required hardware like Eaton.

In parallel, investors will want to judge if the current stock prices with relatively high earnings-to-price ratio (P/E) are not already pricing some of this expected growth. They will also assess whether the risk of a slowdown in the U.S. economy or a slowdown in AI activity is too high relative to potential growth over the next decade.

Eaton’s Investing Takeaway

Eaton is a company with a century-long history of successful acquisitions and an astute shift toward the right sector early. It seems that the move toward data center build-up and DC technology is one more such successful pivot.

If things keep going as they have been in the past decade, the trends of electrification, digitalization, and reindustrialization should let Eaton easily achieve its growth targets and reward its strategic moves made in the early 2020s.

However, investors will also want to consider current stock prices and ratios and measure them against the risk of a slowdown in AI data center construction. Or any potential disruption that would slow down the economy and investments, for example, an energy crisis triggered by wars abroad (Ukraine-Russia, Iran, etc.).

So, in any case, investors interested in Eaton will want to integrate it into a diversified portfolio able to hedge such risks by including other types of assets, for example, with safe energy producers (against a potential energy crisis) or defensive sectors.

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