ABB's Act Phase: Rotork Deal and Data Center Demand Power Another Record Quarter

Record Quarter, Record Ambition

ABB's second quarter was another blowout: first-time orders of $12 billion, revenues at $9.5 billion, and the Rotork acquisition announced. The company raised its 2026 revenue growth guidance to low double-digit to low teens, "adding confidence to our current margin outlook," as CEO Morten Wierod put it. The standout issue was a triple-digit order increase in data centers, which continue to drive Electrification's 58% comparable order growth. “We have seen a very strong comparable growth, of course, coming into these quarters, for the Electrification business, reaching the first time about $5 billion in Q4, first time about $6 billion in Q1, and now the first time about $7 billion. Continue always making records in business. I haven't seen that happening, that always happen. We should kind of be a bit also aware, of course, of that one.” — Morten Wierod, Chief Executive Officer · 2026-07-16 The company is careful to note that this includes a growing contribution from data center cooling, where Motion is a component supplier to major cooling players.

The Rotork Deal and the 'Act' Phase

The day's biggest news was the $5.5 billion offer for Rotork, a leading actuator maker. Morten framed it as the logical extension of ABB's automation loop—the sense, control, act feedback cycle. “We have followed Rotork for quite some time, and been impressed about the performance. What we really like is the leadership in technology and on market leadership. That are our two aspects that we like, and it's a good fit with the Electrification and Automation focus from ABB, also it's very similar to Rotork.” — Morten Wierod, Chief Executive Officer · 2026-07-16 The deal would add about 12% to Automation revenues and improve that segment's operational EBITDA margin by 120 basis points.

I think here maybe the timing is from an ABB side. We are running as a strong performing company. We have a good governance model in our ABB Way is well established, we believe it's the right time also to take in some bigger assets or bigger parts into the company.

This is consistent with the M&A strategy Morten articulated in the fall of 2025, when he said the company would "do more M&A" to capture growth in electrification and automation. The Rotork target sits squarely in that playbook: a high-margin, technology-driven business that extends ABB's reach into the actuation layer.

Pricing and Data Center Momentum

Pricing finally is accelerating. Management reported a 2% price increase in Q2, up from roughly 0.5% a year earlier. “Now, we see for this quarter about 2% increase in price. Up from the Q1. That is also what we talked about after the first quarter. We also said that we will, because we need some time to get that full compensation of the cost increases we saw earlier in the year. There is a bit of a lag, and that is what we are executing on and according to that plan. That is still valid, as we said earlier, that it will be more than compensated on cost by the end of the year.” — Morten Wierod, Chief Executive Officer · 2026-07-16 This is a marked change from the July 2025 call, when Morten said “We see a bit positive pricing. Of course, this is an average. I always say on a global business, there are the average of maybe 0.5 point of price increase.” — Morten Wierod, Chief Executive Officer · 2025-07-21 The improvement reflects stronger pricing in the Americas and a reversal of deflation in China, plus the ongoing tightness in medium-voltage gear for data centers.

On the 800V DC architecture, the company is positioned but not yet booking orders.

We have zero order in the backlog for 800 volt DC data centers. Nobody has, because there is waiting for the availability of components from NVIDIA and the like. That's the next step.

Contrasts and Outlook

The comparisons to prior quarters are instructive. In October 2025, Morten noted that lead times had stabilized because capacity additions offset demand: “The lead times is, I would say, on a similar level that what we had last year because even if we have a higher demand, we also put more capacity online.” — Morten Wierod, CEO · 2025-10-16 That pattern continues, with the company raising guidance on the back of new capacity. However, Motion's profitability is being dragged down by the Gamesa Electric acquisition and operational issues, while the trialing e-mobility business narrowed its loss to $18 million, on track for breakeven by year-end.

Monday's report confirms ABB is executing on its growth strategy while absorbing a major acquisition. The Rotork deal is a strategic pivot that could define the next decade, and the record order book gives management confidence to raise guidance. The question is whether the market is ready to pay up for the transformation, as the stock remains below its recent peak, but the underlying momentum is undeniable.