Why ABB Has the First-Mover Advantage Over Siemens

Data center power is shifting from AC to DC. It is one of the bigger technical changes the industry has seen, and ABB, the Swiss industrial group, sits at the center of it.

ABB's stock is up about 40 percent this year, the best performer in the SMI index. Last week, Bank Vontobel, JPMorgan, and Bank of America all raised their estimates. The reasons are not complicated: data center demand keeps climbing, and electrification is speeding up across the economy.

Behind those upgrades is a change that goes wider than ABB. AI is pushing data center power infrastructure toward its limits. The next generation of AI systems will pull far more electricity than current setups can handle, and faster chips with better cooling are not going to close the gap. The power infrastructure itself needs to be rebuilt.

An era of surging power consumption

The main idea on the table is replacing AC distribution with 800-volt DC. Current flows in one constant direction. It sounds like a small technical tweak, and it may be one of the largest shifts in data center construction in decades. The operators (Microsoft, Amazon, Meta) win. So do the equipment makers in power distribution, power electronics, and switchgear. ABB is best placed among them. Schneider Electric, Eaton, and Siemens also benefit, to different degrees.

Most of this discussion is coming from technology research firms. SemiAnalysis, a US-based outfit, warns that AI data center power draw is climbing fast. A few years ago, a server rack pulled tens of kilowatts. The coming racks will pull hundreds. Each new GPU generation from Nvidia and AMD brings another leap in computing power on top of that.

Data center power distribution: an architectural overhaul

SemiAnalysis argues that AC distribution with multi-stage voltage conversion has hit a wall. Power comes into the data center as AC. It then steps through multiple conversions to reach the DC that processors actually need. Each conversion loses energy as waste heat. Traditional low-voltage distribution also runs at very high currents, which eats copper and makes cooling harder than it already is.

The answer is 800VDC. Higher voltage means lower current, and lower current means lower line losses. SemiAnalysis calls this a full architectural change rather than an incremental fix. By their numbers, a gigawatt-scale AI campus saves about 5 percent on energy from the more efficient DC distribution alone.

The market has not priced this in

Oxcap Analytics, a UK research firm, says capital markets still do not see how big this is. Most of the attention is on rack-level PDU makers. But the 800VDC shift runs through the whole electrical chain: low-voltage gear, transformers, power electronics, UPS, distribution, cooling. Every link gets reworked.

Andreas Willi, who leads Oxcap's research on this, thinks the total market gets bigger in the first phase rather than smaller. New DC converters and side-mounted power modules more than make up for the old rack-level gear that gets phased out. His estimate: starting around 2027, equipment spend per megawatt rises about 12 percent.

Then there is protection and control, a segment almost nobody talks about. Willi points out that DC systems need far more from their safety devices than AC systems do. Fault currents behave differently. Arcs are harder to extinguish. That happens to be where ABB is strongest.

Why ABB has the first-mover advantage

Zürcher Kantonalbank agrees. The new power architecture is a long-term growth driver for electrification, and ABB is well positioned to capture it. The bank expects ABB's data center revenue share to grow significantly.

Ben Uglow at Oxcap makes a sharper argument. ABB's edge is not one product. It is the DC engineering experience the company built up over years in marine propulsion, EV fast charging, and other fields. It is also the early move into electronic protection relays and a strong position in medium-voltage equipment. Those happen to be the exact domains that 800VDC architecture depends on.

ABB versus Siemens

Uglow says ABB management told him they plan to launch a solid-state transformer pilot this year. These transformers use power semiconductors instead of copper windings and iron cores. They are more efficient, take up less space, and can regulate current in real time.

ABB management also estimates that by 2030, DC distribution will make up 40 to 50 percent of new power infrastructure in hyperscale AI data centers.

Siemens is harder to judge. Uglow has covered both for years and thinks the technology gap is not wide. The difference is mostly transparency. Siemens barely breaks out data center numbers, so the market likely undercounts its exposure. On the other hand, Siemens relies less on traditional UPS, which is the segment that gets hit first by DC adoption. Less downside, but harder for investors to see what is really there.

A long transition

No analyst expects 800VDC to happen fast. There is no firm date for when it becomes the standard. The direction is clear because AI power demand leaves no choice, but the speed depends on standardization, safety rules, and how quickly cloud providers refresh their equipment.

SemiAnalysis maps it as a four-phase, multi-year rollout that could stretch to 2029. Zürcher Kantonalbank writes that meaningful revenue impact before 2028 is unlikely. Willi at Oxcap points to 2028 to 2029 as the window where the new architecture starts moving the needle.

Near-term: half-year earnings

The immediate focus is ABB's half-year results, due July 16. Uglow's checks suggest electrification orders are still strong, and management has pushed back on the idea that the demand surge is just customers pulling orders forward. But he also warns: after the stock's run, even a good set of numbers may not lift it further. At 31 times forward earnings, ABB is not cheap.

The long-term case does not rest on one quarter. ABB's EBITDA margin has climbed for a decade and now approaches 20 percent. The S&P Capital IQ consensus has it at 22.4 percent by 2028. Siemens runs around 15 percent. Return on invested capital sits above 20 percent, comfortably above the cost of capital, and has done so for five years. For an industrial company, that kind of number is rare. It suggests ABB can fund an 800VDC investment cycle and still generate decent returns on the other side.

ABB has not given specific 800VDC revenue targets. What the company does say is that data center demand is not cooling. CEO Morten Wierod told the Q1 call that data center orders grew by a triple-digit percentage. Full-year guidance was raised: organic revenue growth in the high single digits to low double digits, with EBITA margin above last year.