Powering the AI buildout: Europe's industrial exposure to American capex
- Felix Schmidt
- May 17
- 4 min read
Siemens Energy posted record quarterly orders of €17.7bn on Tuesday. Grid Technologies orders rose 41.5%. US orders more than doubled year-over-year. Management raised full-year revenue growth guidance to 14-16% and net income to around €4bn.[1]
The same pattern shows up at ABB and Schneider Electric. Three European industrial firms have become leading suppliers in the global AI grid buildout, and the demand they are experiencing is structural.
AI data centers consume electricity at industrial scale. Hyperscalers are the largest cloud-computing firms: Amazon, Microsoft, Google, Meta. Their campuses run 100 megawatts to gigawatts.[2] A 500 MW campus is comparable to an aluminum smelter.[3] Delivering that power from the grid to the chip requires a specific chain of equipment. Siemens Energy supplies the transformers and substations that connect campuses to the grid; ABB supplies medium-voltage switchgear and distribution; Schneider Electric supplies power management and cooling inside the data hall. The market is highly concentrated. Of the small group of multinational firms able to supply hyperscale campuses end to end, three are European.[4] Lead times for large transformers now run 18 to 36 months.[5] Grid connection queues in Northern Virginia, the world’s largest data center hub, now reach up to seven years.[6] Chip supply once limited the AI buildout. Electrical infrastructure does now.
Three of Europe’s largest industrial firms posted some of their strongest order growth in years. Siemens Energy’s Grid Tech orders rose 41.5%, and Gas Services posted its highest quarterly intake in the firm’s history on US data center demand. Siemens Energy’s order backlog reached a record €154bn, up from €133bn a year earlier. The firm raised its revenue growth guidance from 11-13% to 14-16%. ABB Electrification orders rose 44% on a comparable basis in Q1 2026, with management citing triple-digit growth in data center orders specifically. ABB raised its full-year 2026 guidance to high single-digit to low double-digit comparable revenue growth.[7] Schneider Electric’s Energy Management revenue rose 12.8% organically in Q1 2026, led by Data Center. Systems revenue across the firm grew 16%. Schneider reaffirmed its 2026 target of 7-10% organic revenue growth.[8] The driver is the same across all three: US AI data center demand.
The United States is the dominant source of growth in these segments. Siemens Energy’s US orders more than doubled year-over-year in Q2. ABB’s Q1 2026 Americas orders grew 48% on a comparable basis, with US orders up 67%.[7] Schneider Electric reported 14.4% organic revenue growth in North America in Q1, led by its data center systems business. On April 2, Amazon expanded its agreement with Siemens Energy, naming Siemens Energy as the turnkey substation supplier for AWS data centers globally.[9]
This investment is happening in the US for two reasons. Industrial electricity in the EU averaged roughly 18 euro cents per kWh in the second half of 2025,[10] against 9 US cents per kWh in the United States.[11] This makes a difference on the gigawatt scale of AI data centers. Amazon, Microsoft, Alphabet, and Meta are guiding to roughly $700bn of combined capex in 2026, with the bulk on data center and AI infrastructure.[12] Hyperscaler capex is concentrated where the hyperscalers are. This creates a dependency that goes two ways.
A cyclical reading of this earnings season would say hyperscaler capex normalises and these segments deflate. Three things make that wrong.
Hyperscaler capex is committed in multi-year campus buildouts. Meta’s 5 GW[13] Louisiana AI data center entered construction in December 2024.[14] Microsoft committed roughly $80bn[15] to AI-enabled data centers in FY25 and raised FY26 capex guidance to roughly $190bn.[16]
Supply for transformers, switchgear, and turbines is inelastic. Large gas turbines are booked through the end of the decade,[17] mirroring the lead times on transformers and grid connections.
The spending is accelerating. Hyperscaler capex is projected to rise from roughly $450bn in 2025 to over $700bn in 2026, a 55% increase.[12] All three European firms have raised their guidance. They are not pricing a cycle.
Europe’s position is strong but narrow. AI infrastructure has become one of Europe’s most dynamic industrial businesses. Baseline demand from European electrification, grid modernisation, and the energy transition gives all three firms a structural floor. The surge is happening on top of that. There is a real risk attached: European industrials are disproportionately exposed to a single customer base. A slowdown in American capex would hit harder than a comparable slowdown anywhere else. Siemens Energy, ABB, and Schneider Electric occupy three of the leading positions in a small global supplier base, selling into structurally constrained demand. The fundamental position is durable. The concentration is the vulnerability.
Notes
[1] Siemens Energy, "Q2 FY26 Earnings Release," 12 May 2026.
[2] Uptime Institute Intelligence, "Hyperscale colocation: the emergence of gigawatt campuses," 31 October 2023.
[3] S&P Global Commodity Insights, "US aluminum: data center-driven power prices pose major challenge for US primary aluminum sector," 12 January 2026.
[4] Capacity Media, "AI data centre build-out highlights concentration risk in construction supply chain," 16 April 2026.
[5] FJ Inno, "Global transformer supply chain report 2026," 24 March 2026.
[6] Allianz Research, "AI and energy," 12 May 2026.
[7] ABB, "Q1 2026 results release," 17 April 2026.
[8] Schneider Electric, "Q1 2026 revenues," 24 April 2026.
[9] Amazon, "AWS and Siemens Energy team up to advance energy sector digital transformation," 2 April 2026.
[10] Eurostat, "Electricity price statistics," April 2026.
[11] US Energy Information Administration, "Average retail price of electricity, industrial sector," April 2026.
[12] Lord Abbett, "Equity update: navigating the AI revolution," 14 May 2026.
[13] TechCrunch, "Mark Zuckerberg says Meta is building a 5GW AI data center," 14 July 2025.
[14] Data Center Dynamics, "Meta announces 4 million sq ft Louisiana data center campus," 5 December 2024.
[15] Data Center Dynamics, "Microsoft to spend $80 billion on AI data centers in FY25," 6 January 2025.
[16] Microsoft, "FY26 Q3 earnings press release," 29 April 2026.
[17] RMI, "Gas turbine supply constraints threaten grid reliability," 18 June 2025.
Continental is a biweekly column on European economics by Felix Schmidt. New issues appear on Substack first and on the International Economics Post within 48 hours.