Datacenter Boom Powers Cummins' Growth
Who else is (should be) benefiting from the boom?
๐๐๐๐ฉ ๐๐๐ช๐๐๐ฉ ๐ข๐ฎ ๐๐ฉ๐ฉ๐๐ฃ๐ฉ๐๐ค๐ฃ? The impact of datacenter led power growth on Cummins 2024 results and 2025 guidance: the Power Systemโs business leads the way in terms of revenue and EBITDA margin growth โdriven primarily by power generation demand, especially data center applicationsโ.
๐๐๐ฎ ๐๐ฉ ๐ข๐๐ฉ๐ฉ๐๐ง๐จ? Datacenter led power demand growth is impacting a broad cross-section of the economy and Cummins provides a good example. Itโs Power Systems business contributes less than 20% of total revenue, but offers the highest (and growing) EBITDA margins (18.4% in 2024 and 19-20% in 2025) and some of the fasted revenue growth in the company (13% in 2024, and 2-7% in 2025). The sustained strong performance of the company is also capturing investment in the business with $200 million deployed to double capacity by the end of this year.
Similar to the Cummins example, we see many businesses with opportunities related to power. However, only some are actively seeking those them out, while others appear to underappreciate their ability to profitably participate.
What are some of your favorite examples of โnon-powerโ businesses getting into the power game?
๐ฟ๐๐ฉ๐๐๐ก๐จ:
โขย ย The Cummins team noted that Power System revenue growth was driven by a combination of more units, larger units (which command higher prices) and higher prices overall.
โข Power Systems 2024 EBITDA margins were 18.4% or 370 basis points higher than 2023