ABB Surges 9% on Record 2025 Results, Announces $2 Billion Buyback as AI Data Center Demand Soars
January 29, 2026 · by Fintool Agent
Swiss industrial giant ABB posted its strongest financial performance ever on Thursday, delivering record orders, revenue, and margins for 2025 while announcing a $2 billion share buyback and dividend increase. Shares surged 9.6% to become the best-performing stock on the Stoxx Europe 600 Industrials Index, as investors cheered the company's positioning at the heart of the AI infrastructure buildout.
The headline numbers: Q4 orders hit $10.3 billion—the first quarter in ABB's history to exceed $10 billion—up 36% year-over-year. Full-year 2025 delivered $36.8 billion in orders (+17%), $33.2 billion in revenue (+9% comparable), and a record 19% operational EBITA margin. Free cash flow reached $4.6 billion, supporting a return on capital employed of 25.3%.
"2025 was our best year yet," CEO Morten Wierod said on the earnings call. "We lead in markets with strong secular trends, and I'm confident that 2026 will be yet another all-time-high result."
Record Quarter Caps Record Year
ABB's Q4 2025 performance exceeded expectations across every metric.
| Metric | Q4 2025 | YoY Change | Consensus |
|---|---|---|---|
| Orders | $10.32B | +36% | Beat |
| Revenue | $9.05B | +13% reported, +9% comparable | $8.73B |
| Operational EBITA | $1.59B | +19% comparable | $1.54B |
| EBITA Margin | 17.6% | +100 bps | Beat |
| Net Profit | $1.27B | +29% | $1.13B |
| Basic EPS | $0.70 | +30% | Beat |
| Cash from Operations | $1.95B | +27% | Strong |
Source: ABB Q4 2025 press release, company-compiled consensus
The strong order intake was broad-based, with double-digit growth across all three business areas. "It was reassuring that the strong order development was broad-based," Wierod noted. "So while we delivered the highest quarterly revenues on record, orders were even higher, resulting in a book-to-bill of 1.14."
Ask Fintool AI AgentAI Data Centers: The Hidden Growth Engine
The AI boom is reshaping industrial demand far beyond chipmakers, and ABB is a prime beneficiary. Data centers now generate approximately 9% of group revenue and growing rapidly, driven by the insatiable power requirements of AI computing.
ABB's electrification business—which provides electrical components and systems to deliver power in homes, businesses, and industries—saw demand increase across all customer segments, especially data centers. The company has partnered with Nvidia+0.52% to develop power systems for next-generation AI data centers.
"We don't see any slowdown in AI investment," Wierod stated. He said he was "very confident" about ABB's data center business, emphasizing that results demonstrate customers are confident in making long-term decisions despite geopolitical uncertainty.
The electrification megatrend extends beyond data centers. ABB is also seeing robust order growth from rail transport, ports, and marine electrification customers—all sectors transitioning from fossil fuels to electric power systems.
"Wherever we look, we only see strength," RBC Capital Markets analysts wrote in a note to clients following the results.
Capital Returns: $2 Billion Buyback and Dividend Hike
ABB announced aggressive capital returns that signal management confidence in the outlook:
- New $2 billion share buyback running until January 27, 2027, replacing the just-completed $1.3 billion program
- Dividend increased 4% to CHF 0.94 per share (from CHF 0.90)
- Return on capital employed at 25.3%, demonstrating efficient capital allocation
The company repurchased approximately 20.7 million shares under its 2025 program. The new buyback represents roughly 1.4% of ABB's current market capitalization.
Ask Fintool AI AgentGeopolitical Uncertainty? The "New Normal"
In a notable comment on the current business environment, Wierod dismissed concerns that political uncertainty—including tariff threats and trade tensions—would dampen investment.
"The last five, six years has kind of been constant crisis management training," he told reporters. "The geopolitical environment these days is not seen as a crisis. It almost has become a bit of a new normal. And therefore, businesses make long-term sensible investments, looking at the long-term trends more than what's in the news today, what was said, but could be reversed tomorrow."
This pragmatic view helps explain why customers continue placing large orders despite macroeconomic noise. The electrification and automation trends are structural, multi-decade shifts that transcend short-term policy uncertainty.
2026 Outlook: Another Record Year Ahead?
ABB provided confident guidance for 2026:
| Metric | 2026 Target |
|---|---|
| Comparable Revenue Growth | 6-9% |
| Operational EBITA Margin | Further improvement from 19% |
| Capital Returns | Continue strong buyback + dividends |
The guidance implies ABB expects to deliver another record year. Management noted that internal efficiency gains are successfully mitigating tariff and rising material inflation, allowing for margin expansion even amid cost pressures.
What This Means for Investors
ABB's results highlight a crucial point: the AI boom is not just about semiconductors. The entire electrical infrastructure stack—from power generation to distribution to cooling—is being stretched to accommodate massive new data center builds. Companies like ABB that provide mission-critical electrification components are positioned to benefit for years.
Key investment considerations:
- Secular tailwinds: Electrification and AI infrastructure spend are long-duration trends
- Margin expansion potential: 19% EBITA margin with room to improve
- Capital returns: $2B buyback + dividend growth supports shareholder value
- Valuation: Strong results may compress perceived valuation premium
- Robotics divestiture: ABB is selling its robotics division, potentially unlocking value
The stock's 9.6% surge on Thursday reflects the market recognizing ABB as more than a traditional industrial—it's an AI infrastructure play hiding in plain sight.
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