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Siemens Energy AG sought to reassure investors that demand for gas turbines will remain strong into next year, pointing to power-hungry data centers as only one among a range of drivers in the global electrification trend.
“AI is an important player and it will remain an important segment of the gas turbine market but there is obviously a lot of other projects globally,” Chief Executive Officer Christian Bruch said Wednesday in an interview with Bloomberg Television. “It’s not all about AI.”
Siemens Energy is benefiting from a surge in orders for components like gas turbine and grid technology needed to power data centers, especially in the US. Investors have started to question how orders can be converted into revenue, following bouts of volatility in technology stocks fueled worries that spending on artificial intelligence infrastructure could slow eventually.
Shares of Siemens Energy’s US competitor GE Vernova Inc. slumped last month after the company reported results that missed lofty expectations.
Bruch said the market momentum for gas turbines remains intact as utilities and technology companies build out electricity infrastructure, adding that the company continues to see positive demand for 2027 and no signs of customer cancellations. He also said that the conventional power market remained its biggest customer making up the largest share of its order backlog.
The company is keeping a lid on spending with expansion plans for turbine-making capacity unchanged. Earlier this year, it outlined investments of €1 billion ($1.2 billion) to grow US manufacturing of power equipment, including gas turbines and transformers.
“What we are trying to do is getting our productivity up as much as possible on our existing sites,” Bruch said. “We are very sensitive in making sure there’s no oversupply which would harm us going forward in the next decade.”
Holding off on further expansion also addresses a key investor concern: that manufacturers could add too much capacity if AI-driven electricity demand changes course. Improvements in AI efficiency could lower overall electricity use, prompting questions about whether the industry is overestimating long-term power needs.
Bloomberg Intelligence says:
Siemens Energy’s 3Q suggests earnings quality is improving faster than consensus. Gas Services orders were more than 20% above estimates and included 12 gigawatts converted from reservations, easing concerns about backlog firmness. A 17.3% profit margin before special items shows the improved margin profile of the new-unit backlog is lifting profitability. Grid execution remained strong despite a modest profit miss, while Gamesa’s first quarterly profit since 2022 outweighs weak orders, which largely reflected absent offshore awards. — BI senior industry analyst Omid Vaziri.
Read More: AI Boom Has Europeans Paying Extra to Secure Gas Turbines
Earlier Wednesday, the German engineering firm said it expects its fiscal-year profit margin before special items at the upper end of its 10% to 12% guidance range after reporting record quarterly orders that beat analyst estimates. The shares rose as much as 5.7% in early Frankfurt trading, taking gains this year to 31%.
The boom in data center building has prompted customers to pay non-refundable reservation fees to secure scarce turbine production slots, which helped boost free cash flow last quarter, and the order backlog climbed to a record €162 billion.
While demand for gas turbines and grid equipment was the key profit driver, the company’s wind business showed the strongest earnings improvement. Siemens Gamesa generated its first quarterly profit in nearly four years and said it is on target to reach break even this year.
Read More: AI for Industry Is Europe’s Hope to Salvage Manufacturing Edge
Siemens Energy is also weighing the future of its Transformation of Industry business. The unit employs about 17,000 people and makes compressors, steam turbines and energy storage systems.
The company has said it’s been looking at the best long-term setup for the division, responding to a Manager Magazin report in June about a potential spinoff. Bruch stressed that the firm hasn’t made a decision on the future of the business yet, saying that they need to “ensure that these businesses continue to thrive in a challenging competitive environment over the next 3, 5, or 10 years.”
— With assistance from Lizzy Burden
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