Is Schneider Electric’s US$1.9 Billion Switch Deal Reframing the Case for ENXTPA:SU in Data Center Growth?

• During the past week, Schneider Electric announced major new supply capacity agreements including a US$1.9 billion deal with Switch and a US$373 million agreement with Digital Realty, unveiled at its Innovation Summit North America alongside multi-sector collaborations and product launches targeting energy resilience and digitalization.
• These developments highlight Schneider Electric's increasingly central role in enabling data center growth, grid modernization, and supply chain decarbonization across industries focused on the accelerating demand for digital infrastructure and energy efficiency.
• We'll examine how the record-breaking Switch agreement and other announcements reinforce Schneider Electric’s long-term exposure to AI-powered data centers and smart energy demand.

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Schneider Electric Investment Narrative Recap

Schneider Electric shareholders need conviction in the acceleration of global power reliability, digital infrastructure, and data center demand, driven by AI and electrification. This week’s US$1.9 billion Switch deal and Digital Realty supply agreement underscore Schneider’s position in data center solutions, a current catalyst, while also bringing heightened margin and expansion risks into focus. The headline agreements may give near-term support to momentum in mission-critical markets, yet the largest risk remains ongoing margin pressure from a faster shift to lower-margin systems and heavy capital investment requirements.

Of the latest announcements, the Switch deal stands out as most relevant, it is Schneider Electric’s largest cooling service engagement to date and highlights its deepening exposure to hyperscale AI-powered data centers. This directly supports the company’s data center growth pipeline, a key near-term catalyst, even as intensive investments required for capacity and technology can press on margins if demand normalization or inflationary pressure returns.

Yet, despite these advances, another consideration for investors is that growing revenues in lower-margin systems heightens the risk of...

Read the full narrative on Schneider Electric (it's free!)

Schneider Electric's outlook anticipates €48.6 billion in revenue and €6.7 billion in earnings by 2028. This is based on a projected 7.3% annual revenue growth and a €2.4 billion increase in earnings from the current €4.3 billion.

Uncover how Schneider Electric's forecasts yield a €265.10 fair value, a 15% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members have estimated Schneider Electric’s fair value between €144 and €265 per share across 8 separate analyses. Some believe the accelerating AI-driven digital infrastructure push could lift long-term returns, though a shift toward lower-margin business segments means expectations across investors remain far apart.

Explore 8 other fair value estimates on Schneider Electric - why the stock might be worth 37% less than the current price!

Build Your Own Schneider Electric Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Schneider Electric research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Schneider Electric research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Schneider Electric's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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