Hubbell beats Q4 estimates, lifts 2026 guidance on data center boom
Electrical equipment maker projects 7-9% sales growth as AI infrastructure spending surges
Hubbell shares rose 1.6% on Tuesday after the electrical equipment manufacturer reported quarterly results that topped Wall Street expectations and issued an optimistic 2026 forecast fueled by surging demand from data center construction.
The Connecticut-based company posted adjusted earnings per share of $4.73 for the fourth quarter of 2025, narrowly beating analyst estimates of $4.70, according to earnings reports. Revenue for the quarter reached $1.49 billion, matching analyst forecasts and representing a 12% increase year-over-year, driven by 9% organic growth.
Perhaps more importantly for investors, Hubbell projected adjusted diluted earnings per share of $19.15 to $19.85 for 2026, underpinned by expected sales growth of 7-9%. The company's adjusted operating margin expanded to 23.4% in the fourth quarter, up 140 basis points from the prior year, demonstrating improving profitability amid strong demand.
The upbeat guidance reflects unprecedented investment in data center infrastructure as technology companies race to build capacity for artificial intelligence workloads. Hyperscale capital expenditures are projected to exceed $600 billion in 2026, according to industry analysis, with power availability now the primary criterion for site selection.
"Existing electrical grids are under severe strain due to increased demand and the influx of renewable energy," according to the World Economic Forum, creating opportunities for companies like Hubbell that provide the essential components needed to upgrade and expand electrical infrastructure.
The data center sector's power consumption is forecast to increase 50% by 2027 compared to 2023 levels, according to Goldman Sachs research, while global electricity demand is projected to grow 3.7% in 2026 overall, the International Energy Agency reports.
Analysts have responded positively to the results. MarketBeat data shows a "Moderate Buy" consensus rating with an average price target of approximately $497, just above the current trading level of $495.59. The stock has already gained significant ground this year, climbing from a 52-week low of $296.56 to its current level, with a 52-week high of $501.32.
Hubbell, which serves construction, telecommunications, and utility markets with products ranging from lighting to power systems, appears well-positioned to benefit from broader trends in electrification and digitalization. Gartner forecasts worldwide IT spending to grow 10.8% in 2026, totaling $6.15 trillion, further supporting demand for the company's electrical infrastructure products.
The company's market capitalization stands at approximately $25.9 billion, with a forward price-to-earnings ratio of 25.19 based on 2026 guidance. Institutional investors hold 96.8% of outstanding shares, reflecting the company's status as a favored play on the electrical infrastructure build-out needed to support AI and cloud computing expansion.