ABB CEO ‘very confident’ of demand for data centers powering AI

As artificial intelligence transforms global industries, the infrastructure powering this technological revolution is becoming increasingly critical. ABB’s leadership has expressed particularly strong confidence in the sustained growth of AI-driven data center demand, signaling a major shift in industrial automation and electrification strategies.

Unprecedented Growth in Data Center Electrification

Swiss engineering giant ABB is witnessing remarkable double-digit percentage growth in orders for electrification products specifically designed for data centers supporting AI and cloud computing. CEO Morten Wierod’s optimism stems from what he describes as trillions of dollars in investment flowing into the sector, though he acknowledges significant constraints in construction capacity and resource availability.

“Over the next five years I am very confident about demand from data centers,” Wierod stated in a recent interview. “I don’t think there is a bubble, but we do see some constraints in terms of construction capacity not keeping up with all the new investments.”

Strategic Partnerships and Long-Term Vision

ABB’s forward-looking approach extends beyond immediate market opportunities. The company recently announced a strategic partnership with chip manufacturer NVIDIA to develop next-generation electrification products for advanced data center chips. This collaboration represents a long-term investment in the fundamental infrastructure that will power future AI capabilities.

“That’s not for 2025 or 2026, it’s more of a long-term investment,” Wierod explained. “It’s very important to be part of the future technology developments.” This strategic positioning comes at a time when breakthroughs in material science are opening new possibilities for computing infrastructure, including potential applications for quantum computing systems.

Revenue Growth and Market Expansion

The data center segment now represents approximately 7% of ABB’s total revenue, up from 6% in 2024. This growth is driven by sales of comprehensive electrification systems, including medium and low voltage switchgear and uninterruptible power solutions essential for maintaining continuous server operations. The company’s expertise in power management aligns perfectly with the extreme energy demands of AI computation.

Wierod emphasized that AI technology remains in its early stages, suggesting substantial room for continued expansion in data center requirements. The market is attracting not only established tech giants but also numerous newcomers, creating a diverse and rapidly evolving competitive landscape.

Retrofit Opportunities and Infrastructure Upgrades

While much of ABB’s current business focuses on new construction, significant opportunities exist in upgrading existing facilities. Older, smaller data centers require substantial modernization to meet contemporary power and computing demands.

“For some of the older, smaller size data centres, you will need to upgrade the racks with equipment, and you also need to have more power coming in,” Wierod noted. “That is a big opportunity.” This retrofit market complements new construction and extends the company’s addressable market across the entire data center lifecycle.

Global Context and Supply Chain Considerations

The massive scale of data center expansion occurs against a backdrop of increasing international coordination on critical materials and supply chain security. As nations recognize the strategic importance of computing infrastructure, policies are evolving to ensure reliable access to essential components and rare earth elements.

Meanwhile, technological innovation continues across multiple fronts. Advanced manufacturing techniques and chemical processes are enabling more efficient production of specialized components, while the broader technology ecosystem expands to include decentralized financial infrastructure that increasingly relies on robust computational backing.

Implementation Challenges and Resource Constraints

The ambitious expansion of data center infrastructure faces practical limitations. Wierod highlighted that while investment commitments are substantial, actual implementation will require years due to constraints in skilled labor and construction resources. This gap between investment announcements and operational capacity creates both challenges and opportunities for established players like ABB with proven execution capabilities.

The company’s confidence in sustained demand reflects not just current market conditions but a fundamental belief in the long-term trajectory of AI adoption across industries. As organizations increasingly integrate AI into their operations, the underlying infrastructure requirements will continue to evolve and expand.