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Eaton (ETN) stock lost 20.7% in the month to November 4, 2026, while the S&P 500 fell 1.6%. That included a 9.9% fall on November 4, the day after Eaton reported third-quarter results, which erased a 7.0% gain on November 3. Yet third-quarter 2026 revenue rose 28% from a year earlier, and on November 3 management raised its full-year guidance for the third time in 2026. It now expects organic growth of about 14% and adjusted earnings per share of about $13.75, both at the midpoint. Acquisitions added 8 points of that growth, management said. Bulls may be looking past something else management said that day about how data centers get their power. What is changing, and why could it matter for Eaton?
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Eaton Cannot Control When Data Centers Switch To DC
Management said on the November 3 call that data centers are moving from alternating current (AC) to direct current (DC) power because customers see large power savings in the new technology, and that the timing of that transition is not under Eaton’s control.
The subject came up through a question on solid-state transformers, which management called a key part of the new DC design. Management answered that the solid-state transformer is only one of four building blocks needed to win in DC, and said Eaton is leading in the other three as well.
Management said it has 10 pilots running and expects them to turn into volume in 2027, and that Eaton is a leader in today’s data center designs and will stay one. By management’s account, Eaton leads in what data centers buy today, but it does not set the date of the switch. The risk is that data centers move to DC faster than those pilots turn into sales. Management, for its part, said Eaton sells power equipment for both AC and DC designs and wins either way.
Data Centers Lead Growth At Eaton’s Largest Segment
Eaton’s largest segment, Electrical Americas, brought in $13.3 billion in 2025, or 48.4% of the company’s revenue that year. The segment’s revenue grew 16.1% from 2024. In the third quarter of 2026, management said data center sales rose 54%, leading the segment’s 22% organic growth. Data centers and distributed IT, along with commercial aerospace, are Eaton’s strongest markets and together make up roughly a third of its sales, management said.
Eaton stock closed on November 4 at 23.2% below its highest close of the past year, which was $459.96 on August 12, 2026. Even after that fall, the stock trades at 35.2 times its earnings over the past twelve months, against 22.8 for the S&P 500. That multiple reached 43.2 at the end of June 2026, its highest at any quarter-end from the end of 2016 onward. A price this far above the market appears to assume more years of fast data center growth.
Should Eaton Shareholders Worry About The Move To DC?
Some, but the latest figures show no sign of it in Eaton’s sales yet. Eaton’s electrical backlog, the orders it has yet to deliver, reached more than $20 billion, up 46% from a year earlier, management said on the call. Management also said demand continues to run ahead of what Eaton can convert into sales, and that it expects none of its end markets to decline in 2027.
That demand is for Eaton’s business as it stands today, while the move to DC would land on the market that led growth in its largest segment, on a timetable management says Eaton does not control.
Eaton’s next report is expected in February 2027, and data center sales growth in Electrical Americas is the figure to watch.
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