Barclays has outlined a bullish scenario for equipment vendors supplying the electrical backbone of data centers, estimating a peak total addressable market of $140 billion in 2028. That figure assumes Western electrical equipment makers are able to access only 10% of the Chinese market and is built on a unit assumption of roughly $4.6 million per megawatt for a ship-set opportunity.
The brokerage said market consensus currently understates data center demand for the next two years. In response to anticipated stronger deployment of AI infrastructure, Barclays raised operating profit forecasts for Schneider Electric, Legrand and Siemens by about 3% on average.
Barclays also highlighted an evolving technological landscape in data center power delivery. The firm expects 800-volt direct current - an architecture shift away from traditional alternating current and lower-voltage DC systems - to make up a modest portion of incremental installed gigawatt capacity in late 2027, before growing to account for about 30% of installations by 2029. That projected penetration includes not only native 800VDC deployments but also "sidecar" and intermediary solutions that bridge architectures.
Within the power-equipment category, Barclays said certain product lines are likely to see reduced content in 800VDC environments. Transformers, rack power distribution units and uninterruptible power supply systems may face diminished content levels as 800VDC architectures proliferate. Conversely, solid state transformers - currently contributing zero content to these sites - stand to gain substantial presence as the architecture shifts.
The brokerage cautioned that Western manufacturers may capture a smaller share of the 800VDC equipment market compared with traditional systems, pointing to stronger competition from Asian suppliers. Barclays specifically noted that Delta Electronics is expected to begin shipping 800VDC architecture products to Nvidia next quarter, an example of Asian suppliers moving into this space.
Cooling systems will also be affected by architecture and workload trends, Barclays said. The emergence of liquid cooling presents a headwind for chillers and, to a lesser extent, air handling units, while creating major opportunities for cold plates and cooling distribution units that are integral to liquid-cooled deployments.
Beyond hardware, Barclays said the market has frequently underappreciated the role of services and software tied to physical infrastructure management. The brokerage pointed to companies already deriving meaningful shares of data center revenue from services: Legrand generates about 13% of its data center sales from electrical testing services following recent acquisitions, while Schneider Electric accrues about 16% of its data center sales from software and services.
Adjustments to analyst recommendations and forecasts followed from Barclays' reassessment. The firm upgraded Legrand to "overweight" from "equal weight," lifting its price target to EUR185 from EUR159. Barclays said the market is too bearish on the implications of the 800VDC transition and is not fully accounting for Legrand's portfolio changes, noting only about 4% downside to 2029 consensus earnings per share even under a high-case penetration scenario. Barclays raised adjusted EBITA estimates for Legrand by 4% to 6% for 2026-2028.
Schneider Electric retained an "overweight" rating, with Barclays increasing its price target to EUR350 from EUR340 and lifting adjusted EBITA estimates about 2% for 2026-27. The brokerage cited Schneider's market-leading position and exposure to China as supporting factors.
By contrast, Barclays maintained Siemens at "underweight," while nudging its price target to EUR235 from EUR230. In Barclays' model, data center-related sales for Siemens grow 45% in fiscal 2026 and 20% in fiscal 2027 before flattening in 2028. The brokerage cited limited upside to consensus expectations, a relatively rich valuation and modest - though improving - cash conversion as reasons for the underweight call.
Overall, Barclays' note underscores structural changes in both power delivery and cooling that will reshape product content and market share dynamics, while highlighting the growing importance of services and software in vendor revenue mixes as demand tied to AI infrastructure accelerates.
Key points
- Barclays projects a $140 billion peak TAM for full-scope data center electrical equipment in 2028 assuming 10% access to the Chinese market, based on a $4.6 million-per-megawatt ship-set assumption.
- 800VDC is forecast to account for about 30% of data center installations by 2029, shifting equipment content away from traditional transformers, PDUs and UPS systems toward solid state transformers and 800VDC-specific components.
- Liquid cooling presents a headwind for chillers and air handling units while creating major growth opportunities for cold plates and cooling distribution units; services and software are increasingly material to vendor revenue.
Risks and uncertainties
- Market access constraints - Barclays' $140 billion TAM assumes Western suppliers can access only 10% of the Chinese market; actual access could materially alter the opportunity and supplier outcomes.
- Competitive dynamics in 800VDC - stronger competition from Asian suppliers may reduce Western manufacturers' market share in 800VDC systems, impacting revenues for vendors dependent on traditional equipment sales.
- Technology adoption rates - the pace at which 800VDC and liquid cooling are adopted will determine winners and losers across power and cooling equipment lines and may diverge from Barclays' penetration forecasts.