Legrand's Data Center Dominance: Fueling the AI Infrastructure Boom

The global AI revolution is driving unprecedented demand for high-performance data centers, and Legrand (LR), a leader in electrical and digital infrastructure solutions, is capitalizing on this trend. With data center sales accounting for 20% of its total revenue in 2024 and accelerating organic growth in early 2025, the company is positioning itself as a critical partner for hyperscalers, enterprises, and governments building out AI infrastructure.

The Data Center Growth Engine

Legrand’s data center business has emerged as a cornerstone of its growth strategy. In 2024, data center revenue reached €1.8 billion on a pro forma basis (including acquisitions), up from €0.7 billion in 2019, representing a 19% compound annual growth rate (CAGR). This segment now accounts for 20% of total sales, up from 14% in 2020. Management has set an ambitious target for data center sales to grow to 20–25% of total revenue by 2030, aligning with its goal of achieving €12–15 billion in annual sales by that year.

The first quarter of 2025 underscored this momentum. Data center sales demonstrated accelerating organic growth, with the U.S. market—a critical hub for AI infrastructure—reporting a 20.2% year-over-year sales surge. North America overall grew 18.7%, driven by demand for Legrand’s “highly configurable” data center solutions, which optimize power distribution, cooling, and connectivity.

Driving Growth: Key Markets and Acquisitions

Legrand’s regional performance reflects its strategic focus on AI-driven markets:

1. North America:
2. The U.S. market, which accounts for 37.7% of Legrand’s global revenue, is a linchpin for data center growth. In Q1 2025, U.S. sales rose 20.2%, fueled by hyperscaler investments in cloud and AI.

3. Target: North American data center revenue is expected to hit $520 million in 2024, up from $450 million in 2023.

4. Asia-Pacific:

5. Acquisitions like Computer Room Solutions (CRS) in Australia (€30 million in annual revenue) are bolstering Legrand’s presence in a region where data center spending is projected to grow 14% annually through 2027.

6. India and the Middle East contributed +7.1% and +7.7% growth, respectively, in Q1 2025.

7. Europe:

8. Despite a -0.3% sales decline in Q1 2025 due to sluggish building markets, mature economies like Germany and the UK remain steady contributors.

Strategic Moves to Scale Dominance

Legrand’s acquisitions and R&D investments are designed to deepen its AI-infrastructure footprint:

• Acquisitions: In 2025, Legrand acquired Performation (Netherlands), a connected health software firm, and CRS (Australia), a data center infrastructure specialist. These deals add €240 million in annualized revenue and enhance its capabilities in white space management and edge computing.
• R&D Focus: A 30% increase in R&D spending is funding innovations like the Linkeo PDU (power distribution units) and LCS3 fiber solutions, which reduce energy consumption and improve scalability for AI workloads.
• Sustainability: The 6th CSR roadmap (2025–2027) integrates circular economy principles, ensuring Legrand’s solutions meet rising ESG standards in data center construction.

Financial Fortitude

Legrand’s financials reflect the robustness of its data center strategy:

• Q1 2025 Results:
• Sales: €2.28 billion (+12.3% YoY).
• Adjusted Operating Margin: 20.7% of sales (up 0.2 points YoY), demonstrating strong profitability in high-margin segments like data centers.
• Free Cash Flow: €188 million (+28.7% YoY), funding acquisitions and innovation.

Challenges and Strategic Adaptations

Despite strong growth, Legrand faces headwinds:

• U.S. Customs Volatility: Tariffs and trade policies are being mitigated via price adjustments and supply chain reconfigurations.
• Currency Risks: A ~2% drag from exchange rates is expected in 2025, though acquisitions and organic growth are projected to offset this.

Conclusion: A Prime Play for the AI Infrastructure Boom

Legrand’s data center business is not just growing—it’s becoming a strategic linchpin for the global AI economy. With 20% of its revenue tied to this segment in 2024 and a clear roadmap to expand this to 20–25% by 2030, the company is well-positioned to capitalize on hyperscalers’ and enterprises’ demand for energy-efficient, scalable infrastructure.

Key metrics reinforce this thesis:
- Market Leadership: Data center sales grew +15% organically in 2024, outpacing broader construction sectors.
- Margin Resilience: A 20.7% adjusted operating margin in Q1 2025 highlights the profitability of its high-value solutions.
- Strategic Execution: Acquisitions like CRS and Performation add critical mass in key regions.

For investors, Legrand offers exposure to a secular trend with minimal direct competition. While macroeconomic risks exist, its diversified geographic footprint and innovation pipeline provide a robust foundation for long-term growth. As AI reshapes the digital landscape, Legrand’s infrastructure solutions are set to power the next wave of technological advancement.