Bank of France ranks Eaton Corp. Plc (ETN.US) as its preferred target for 2026, with a bullish outlook of nearly 30% driven by data center demand.

The stock research department of Paris Bank in France has listed Eaton Corp. Plc (ETN.US) as its top investment target for 2026, citing its benefit from the accelerating demand for artificial intelligence data centers and the perceived disconnect between its current market valuation and its fundamentals. Senior analyst Andrew Buscaglia has set a target price of $430 for the electrical equipment manufacturer, implying a potential increase of nearly 30% from current levels. His updated optimistic scenario analysis suggests that if growth expectations are realized, the stock price could rise to $500. In a report to clients on January 23rd, Buscaglia noted that while sales trends continue to improve, investor sentiment towards Eaton Corp. Plc's data center business has cooled off. In 2024, its data center revenue grew by 45%, and by an additional 50% in the first nine months of 2025, yet the company's valuation has declined during the same period. He sees this shift in market sentiment as an investment opportunity. Capacity expansion expected to alleviate profit pressure Due to the company's capacity expansion to meet surging demand, Eaton Corp. Plc's Electrical Americas segment faced margin pressure last year. As part of a larger-scale expansion plan, Eaton Corp. Plc is constructing six final assembly facilities, with most expected to be completed by early 2026. With increased capacity utilization and production, Paris Bank expects its profit margins to recover. Buscaglia suggests that sales related to AI-driven data centers may start to make a more significant contribution to profitability in the second half of this year, potentially surpassing current market expectations. Boyd acquisition enhances long-term data center prospects The report also reassesses Eaton Corp. Plc's acquisition of liquid cooling solutions provider Boyd. Buscaglia now expects that the company's data center revenue growth rate over the next few years may exceed 40%, higher than the previously forecasted 30% mid-range. He points out that Boyd's technology enables Eaton Corp. Plc to access higher value segments within data centers and expands its long-term addressable market size. Paris Bank believes that Boyd's revenue could double between 2025 and 2028. Vehicle business spin-off seen as shareholder-friendly Buscaglia also mentioned market reports that Eaton Corp. Plc is exploring options for its vehicle business, including a potential sale. He estimates the business's valuation to be around $5 billion, higher than Paris Bank's current assumptions. He states that a spin-off of this business could be welcomed by investors, especially if the proceeds are used to reduce debt or return capital to shareholders. Overall, Paris Bank believes that with the acceleration of AI infrastructure spending, Eaton Corp. Plc is prepared for a new phase of growth, with its earnings and profit margins catching up, as reflected in the visible order and sales growth trends.