Sustainable Growth Advisers, LP on Schneider Electric SE
Thesis
SGA initiated Schneider Electric because it is one of the few global companies capable of delivering end-to-end electrical solutions and services at scale. Its installed base, broad product portfolio and long-standing distributor relationships create switching costs and support pricing power. The company should benefit from electrification, AI-related data-center investment, aging electrical infrastructure and distributed energy systems. Data-center revenue is expected to remain strong, while buildings and non-AI industrial markets are near cyclical lows and offer recovery upside. Current margin pressure from capacity expansion, tariffs and inflation is viewed as manageable and partly a consequence of strong demand, so SGA plans to build the position opportunistically.
“We plan to continue building the position opportunistically.”
Key risks
- Cyclical weakness in construction, housing, energy transition and manufacturing
- Increasing data-center competition and changing technology standards
- Margin pressure from capacity expansion, tariffs and inflation