ABB Electrification Unit Powers Ahead While Automation Lags

(Bloomberg) — ABB Ltd.’s orders rose in the fourth quarter, as demand for power hungry data centers helped offset a slump in the Swiss manufacturer’s robotics, automation and electric-mobility businesses.

Orders climbed to $8.1 billion in the three months through December, a 7% increase from the same period a year earlier on a comparable basis, the Zurich-based company said Thursday. Net income rose 7%.

Soaring investments in data centers, driven by growth in artificial intelligence, have been a bright point for ABB, which produces transformers that enable power grids to feed the centers’ substantial energy needs. Those gains have countered a drop in demand for its robotics and automation products, as manufacturing in China slowed. 

After rising about 3% in early trading, ABB’s shares fell as much as 2.5% over investor concerns that the company’s margins may have peaked. The stock has gained more than 30% in the past year.

“The potential for growth appears limited” as long as the robotics, automation and electric-mobility units fail to achieve any significant improvement, said Bernd Laux, analyst at Zuercher Kantonalbank.

The comments indicated investors weren’t assuaged by Chief Executive Officer Morten Wierod’s comments earlier Thursday in a Bloomberg TV interview, when he said that the robotics business had begun to turn the corner, with orders picking up in Asia and the US.

ABB anticipates mid single digit growth in comparable revenue this year and an improvement in margins. The company is increasing its share buyback program to $1.5 billion, running through Jan. 28, 2026, and is also planning more acquisitions.

Read: Europe Risks Losing More Jobs Over Energy Costs, ABB CEO Warns

Wierod acknowledged some market uncertainty and an adverse impact from exchange rates, mainly the appreciation of the dollar.  

The stock declined earlier this week after Chinese startup DeepSeek released a new open source AI model that raised questions about the economics of the technology and the need to spend billions on its infrastructure. The longer term impact of DeepSeek on electrification companies isn’t yet clear.

“We believe in the long term of AI and data centers, that is clearly a need,” Wierod told Bloomberg TV. “It’s always a discussion of who will be a winner in that market, but I don’t think there is a discussion on whether AI is a thing that will go away — it’s here to stay.”

ABB’s board of directors will propose Claudia Nemat as new member for election at the company’s annual meeting in March. Lars Förberg, who joined the board as part of activist fund Cevian, is stepping down. 

(Updates with shares in fourth paragraph, analyst comment in fifth.)

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