Siemens Energy’s Grid Business Charges Past €7 Billion as AI Demand Overhauls the Outlook

Siemens Energy beats Q2 order forecasts with €17.8B, driven by AI data center demand; Grid Technologies upgrades outlook, while Gamesa narrows loss but cash flow worsens.

Siemens Energy has delivered a set of second-quarter numbers that leave little room for doubt about the direction of travel. The group’s order intake surged to nearly €17.8 billion, coming in roughly 14 percent ahead of analyst expectations. The shares responded in kind, climbing around 3 percent to trade at €180. But beneath the headline beat lies a more nuanced story — one of a grid business turbocharged by artificial intelligence, a wind unit still bleeding cash, and a new technology pact that could reshape how the company operates.

Grid Technologies Steals the Show

The standout performance came from the Grid Technologies division, which booked orders of almost €7 billion — 25 percent more than analysts had penciled in and a jump of over 40 percent compared with the same period last year. The momentum has been strong enough to force a significant upgrade to the full-year targets. Instead of the 19 to 21 percent revenue growth previously forecast, the division now expects expansion of 25 to 27 percent, with margins climbing to between 18 and 20 percent.

The demand is being driven in large part by the insatiable appetite of AI data centers. In the first quarter, these facilities already accounted for roughly a quarter of Grid Technologies’ order intake. The broader electrification push, combined with the need to modernise aging power networks, is creating a tailwind that shows no signs of abating.

Gas Services also outperformed, with orders reaching €8.9 billion against a consensus estimate of €7.3 billion. The segment is targeting full-year revenue growth of 16 to 18 percent and a margin of 14 to 16 percent.

Gamesa’s Losses Narrow, But Cash Flow Worsens

The perennial drag on the group’s performance, Siemens Gamesa, continues to improve at the operating level but remains a cash drain. The wind turbine division narrowed its operating loss to €44 million in the second quarter, a marked improvement from the €249 million loss recorded a year earlier and better than the €74 million loss analysts had expected. The unit has nudged up its revenue growth target to between 3 and 5 percent and is still aiming to break even on earnings.

Yet the cash picture tells a different story. Gamesa’s free cash flow swung to negative €654 million, nearly double the negative €333 million in the prior-year period. That deterioration is one reason the group’s overall earnings before special items came in at €1.16 billion, slightly below the market consensus of €1.22 billion. Net profit after tax landed at €835 million, while revenue of €10.3 billion also missed the €10.8 billion analysts had been looking for.

A New AI Alliance and a Record Order Book

On April 27, Siemens Energy signed two memorandums of understanding with Tata Consultancy Services, extending a partnership that has lasted more than two decades. Under the new agreement, TCS will remain the company’s preferred IT partner and will help modernise its digital infrastructure. More significantly, the two groups plan to jointly develop AI-ready data centers and integrate tools such as digital twins and predictive analytics into power generation and grid operations. The aim is to move early-stage AI experiments into large-scale deployments.

The broader order book has swelled to a record €146 billion, giving the company a book-to-bill ratio of 1.82 — meaning new orders are coming in nearly twice as fast as existing ones are being worked through. That visibility has prompted management to lift the group’s full-year guidance sharply. Adjusted revenue growth is now expected to be between 14 and 16 percent, up from the previous 11 to 13 percent range. The margin target has been raised to 10 to 12 percent, and free cash flow guidance has been nearly doubled to around €8 billion, from an earlier range of €4 billion to €5 billion.

Geopolitical Risk Lurks in the Middle East

For all the optimism, investors are keeping a close eye on one geopolitical wild card. Roughly 35 percent of the new gas turbine orders booked in 2025 came from the Middle East. Siemens Energy’s total exposure in the region stands at €9 billion, representing about 15 percent of the entire order backlog. Analysts have cautioned that if tensions escalate, governments in the region could redirect spending toward defence, potentially delaying or cancelling infrastructure projects.

The Stock Takes a Breather After a Record Run

The shares hit a 52-week high of €188 on April 24, but have since pulled back about 7 percent to trade around €175. Even after that retreat, the stock is up more than 42 percent since the start of the year and has more than doubled over the past twelve months. Management has played down concerns about US import tariffs, noting that with 28 production sites in the United States, the impact remains in the low hundreds of millions of euros.

The full second-quarter results are due on May 12. By then, the market will have a clearer picture of whether Gamesa’s turnaround can accelerate fast enough to keep pace with the grid-driven momentum — or whether the wind division will continue to act as a brake on one of the DAX’s most remarkable stories.