ABB's Record Order Book Meets a Cold Shoulder as AI Trade Loses Its Glow

ABB shares fell 5.0% on Tuesday, caught in a broader retreat from artificial-intelligence-related equities even as the Swiss engineering group unveiled a record order intake and nudged its full-year revenue guidance higher.

The drop reflects a shift in how investors are treating the company's role as a key supplier to data centres. Reuters linked the decline to a wider sell-off across AI-exposed stocks, a mood swing that has left ABB's fast-growing order book exposed to sentiment rather than shielded by it.

Data centre demand keeps building

The third quarter of 2026 delivered an order intake of USD 12,055 million, a record for the group and a 40% jump on the same period a year earlier. Orders tied to data centres climbed by a triple-digit percentage, according to ABB, with demand concentrated in power distribution products and cooling systems amid a sustained boom in spending on AI infrastructure.

The electrification division, ABB's largest and most profitable unit, saw orders surge 70%, the Handelsblatt reported. Group-wide, the book-to-bill ratio reached 1.24 — meaning ABB booked more new business than it converted into revenue during the quarter.

That momentum carried through to the top line, where revenue rose 14% to USD 9,701 million. Operating EBITA margin came in at 20.8%, an improvement on the prior year, and operating profit grew faster than sales. The operating EBITA figure of USD 2.03 billion edged past the analyst consensus of USD 2.0 billion, though revenue fell just short of expectations, according to Reuters.

Profit fails to keep pace

The picture darkened further down the income statement. Net profit slipped 2% to USD 1,181 million, and earnings per share came in at USD 0.65.

RBC Capital Markets flagged the order intake as well ahead of consensus but said earnings per share had clearly missed market expectations. The broker kept its "Sector Perform" rating and a price target of CHF 82. Berenberg, which also left its cautious stance unchanged, attributed the weaker-than-expected EPS to non-cash charges — a nuance that tempers how much the order surge can be read as an immediate earnings signal. The German broker reaffirmed "Hold" with a CHF 80 target.

Guidance offered its own mixed message. ABB now expects comparable revenue growth for 2026 at the lower end of its 13–19% range, according to dpa-AFX, with the operating EBITA margin rising at least 270 basis points versus the prior year. For the closing quarter, management anticipates comparable revenue growth roughly in line with the reported period, but a sequential decline in the operating EBITA margin.

A Japanese joint venture looks past the quarter

Running alongside the AI debate, ABB announced an expansion with Mitsubishi Electric covering the latter's low-voltage power distribution business. ABB will pay JPY 79 billion for a 51% stake in the joint venture formed from the unit and will take full ownership of the associated sales activities outside Japan.

Completion is expected in the second half of 2027, subject to approvals, and ABB holds an option for a full takeover over the medium term. The agreement is a future expansion step rather than a completed acquisition.

For now, operational momentum and demanding profit expectations are pulling the stock in opposite directions, with the AI backdrop shaping how investors weigh the two. The next scheduled checkpoint comes on 3 February 2027, when ABB reports fourth-quarter and full-year 2026 results.