Analyst(s): Olivier Blanchard
Publication Date: November 2, 2026
ABB’s third quarter showed demand for its electrification portfolio running well ahead of what it can deliver in the near term, with data centers again leading the way. New direct current technology and a joint venture in Japan point to where management wants the next leg of growth to come from.
What Is Covered in This Article:
- ABB’s Q3 FY 2026 financial results
- Electrification demand tests capacity discipline
- Infinitus DC portfolio targets AI data centers
- Mitsubishi Electric JV opens in Japan
- Guidance and Final Thoughts
The News: ABB (NYSE: ABB) reported third-quarter results for the period ended September 30, 2026. Revenue was $9.70 billion, up 14% year on year (YoY) on both a reported and comparable basis, versus consensus of $9.77 billion. By business area, Electrification revenue was $5.42 billion (up 21% YoY), Motion revenue was $2.32 billion (up 11% YoY), and Automation revenue was $2.13 billion (up 6% YoY). Orders reached a record $12.06 billion, up 40% YoY, for a book-to-bill ratio of 1.24 and an order backlog of $32.26 billion. Operational EBITA rose 24% YoY to $2.03 billion, with the margin expanding 160 basis points to 20.8%. Net income attributable to ABB was $1.18 billion, down 2% YoY, and basic earnings per share (EPS) was $0.65, down 2% YoY.
“ABB delivered record order intake and improved operational performance with strong cash flow and return on capital. We advanced our leading position in direct current technology, and today we progressed on M&A with a new electrification joint venture with Mitsubishi Electric,” said Morten Wierod, CEO of ABB.
ABB Q3 FY 2026 Earnings Show Record Orders Outpacing Revenue on Data Centers
Analyst Take: The first thing we notice here is a strong demand story: Comparable orders rose 40%, well ahead of revenue, pushing the backlog to roughly the size of ABB’s entire FY 2025 revenue base. The Operational EBITA margin was the best Q3 result in ABB’s history, yet basic EPS slipped on a non-cash hedge linked to the Rotork acquisition and a tax charge tied to separating ABB Robotics, now a discontinued operation.
Investors fixed on that dip and a slight revenue shortfall, and the shares fell as much as 6.7% on the day. I think that reaction misreads a quarter whose bigger news was the Infinitus DC launch and the Mitsubishi Electric joint venture, but also misses the point of where ABB looks to be headed.
Electrification Demand Now Tests ABB’s Capacity Discipline
Electrification orders also climbed 70% on a comparable basis to $7.67 billion, the seventh straight quarter of sequential growth. Note that this lifts the business area’s backlog to $16 billion.
Data centers grew at a triple-digit rate, with orders excluding data centers rising at a marginally more conservative high-teens pace, led by utilities and commercial buildings.
One signal that caught our attention: Management noted that some product lines are running close to full capacity until new plants come online during 2027, while capital expenditure (capex) holds near $1 billion a year.
With data center lead times of 12 to 24 months, much of the 2026 intake ships in 2027 or 2028. Pricing of around 3% now broadly offsets commodity inflation, and the segment margin rose 110 basis points to 25.6%, even with U.S. margins still trailing other regions.
Note: Declining to chase demand with heavy capex protects returns, but the flip side is that ABB will likely be judged on delivery reliability and the U.S. margin gap more than on order headlines.
Infinitus Gives ABB a Route From the Gray Space to the Rack
Infinitus is ABB’s most direct answer to the power architecture shift inside AI data centers, with five modular building blocks spanning grid connection, DC conversion and distribution, protection, and cooling. The company’s thesis is that in a centralized 800-volt direct current (DC) design, up to 75% of electrical infrastructure spend sits in the gray space, versus about 55% in a legacy alternating current (AC) layout. That gray space is where ABB is traditionally strongest.
The otherwise nebulous ROI (but also general power efficiency) story that ABB is attempting to clarify here is this: Management estimates that a 500-megawatt facility moving to DC can cut conversion losses by more than 5%, close to 200 gigawatt-hours a year. This is obviously quite a significant energy savings, especially as energy constraints continue to threaten data center operations and buildouts.
The July acquisition of Advantics, a French silicon carbide power conversion specialist, adds engineering depth, but the catch is that the solid-state transformer will not be available to order until the second half of 2027, and the move to native DC will need to happen in stages.
ABB should therefore use the next 12 months to lock in reference designs with hyperscalers and colocation providers, because technology shifts are exactly when new entrants will try to take share.
Mitsubishi Electric JV Buys Scale in a Market ABB Could Not Crack
A 51% controlling stake in a joint venture (JV) with Mitsubishi Electric’s low voltage power distribution business makes ABB the low voltage market leader in Japan, a large electrification market where it has had limited reach.
ABB will pay around JPY 79 billion (about $495 million) for a business valued at an enterprise value (EV) of roughly $890 million, or about 11.1 times EBITDA. The plan mirrors the GE Industrial Solutions integration: sell ABB products through Mitsubishi Electric’s channels, combine platforms, and lift the margin to at least 20% Operational EBITA within five years.
Rotork, expected to close in the first half of 2027, sits with Automation, while the JV, expected to close in the second half of 2027, sits in Electrification, which spreads the integration load. With net debt to EBITDA at about 0.2, the CFO pointed to $13 billion to $14 billion of additional deal capacity. The JV is a lower-risk way to buy share, and its margin path will show whether the GE Industrial Solutions recipe can be repeated at a lower entry price.
Guidance and Final Thoughts
For Q4 FY 2026, ABB expects comparable revenue growth broadly similar to the third quarter and a sequential Operational EBITA margin decline smaller than its usual seasonal pattern, excluding a gain of about CHF 240 million from a Swiss property sale.
For FY 2026, it now guides to comparable revenue growth in the low teens, narrowed from low double-digit to low teens, with a positive book-to-bill and a reported Operational EBITA margin improvement of at least 270 basis points YoY.
Capex is set at about $1 billion, and the CFO sees free cash flow moving toward roughly $5 billion after $3.7 billion through nine months.
The outlook excludes the expected $2.4 billion gain on the Robotics divestment, targeted to close by year-end, and FY 2027 guidance will come in January, with roughly 40% of the backlog expected to convert to revenue next year.
Motion’s margin should improve sequentially in Q4 as project inefficiencies ease. The EPS dip should not distract from an electrification franchise with pricing power and a credible DC roadmap, whose risks now sit in capacity and integration execution far more than in demand.
See the full press release on ABB’s Q3 FY 2026 financial results on the company website.
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Author Information
Olivier Blanchard is Research Director, Intelligent Devices. He covers edge semiconductors and intelligent AI-capable devices for Futurum. In addition to having co-authored several books about digital transformation and AI with Futurum Group CEO Daniel Newman, Blanchard brings considerable experience demystifying new and emerging technologies, advising clients on how best to future-proof their organizations, and helping maximize the positive impacts of technology disruption while mitigating their potentially negative effects. Follow his extended analysis on X and LinkedIn.
