BUSINESS

Eaton Corporation’s (ETN) stock rose last week. Shares of the Dublin-based power management company closed at $424.77 on September 18, a gain of about 7.9% over five trading days. The stock is now up close to 30% for the year, giving Eaton a market value of around $165 billion.

What drove the increase was Morgan Stanley’s 14th Annual Laguna Conference on September 16, where Eaton CEO Paulo Ruiz presented a stronger picture for the company’s data center business than most investors were expecting. His message caught Wall Street’s attention and caused several banks to lift their price targets.

Eaton plays a major role when it comes to building AI facilities. Ruiz highlighted how much revenue that role could deliver in the next few years.

Ruiz’s Laguna comments sparked a fresh look at Eaton

Ruiz, who took over as CEO in June 2025 after leading Eaton’s Industrial Sector and occupying senior positions at Siemens, walked investors through the company’s 2026 guidance history. 

Eaton originally forecast 8% organic growth, raised the range to 9%–11% after first-quarter results, then lifted it to 11%–13% after the second quarter. At Laguna, Ruiz said Eaton is now targeting the high end of that current range and pointed to a “very strong” July and August performance.

“We see that the best years for this business are still ahead of us,” Ruiz told the audience, according to a transcript published by Seeking Alpha. He said he expects Eaton will have added roughly $10 billion in revenue in the past three years, between 2024 and 2026, or about 10 times the top-line growth of the prior decade.

“I’m really confident there’s a new Eaton taking place, because the strategy we have in place today is designed to do both top-line growth and margin expansion at once,” he added. Data center demand is responsible for most of that growth, with orders climbing about 85% and revenue rising roughly 65%. 

Boyd Thermal, owned by Eaton, had its projected 2026 sales raised to $1.8 billion from $1.1 billion the previous year, a scale-up Eaton’s management tracks separately from the broader Electrical Americas’ (a major operating segment of Eaton) data center ramp.

Eaton shares closed at $424.77 on Sept. 18 after CEO Paulo Ruiz laid out a stronger data center outlook at Morgan Stanley’s Laguna Conference.Cheng Xin / Getty Images

How Eaton fits into the AI power buildout

Eaton makes the electrical equipment that carries power from the grid all the way to the chips inside AI servers. That includes switchgear, uninterruptible power supplies, busways, transformers, and now liquid cooling systems through the $9.5 billion Boyd Thermal acquisition that closed in March. Roughly 75% of Eaton’s revenue comes from its electrical segments, with the rest split between aerospace and vehicle businesses.

The company’s second quarter of 2026 set several records. Revenue increased 21% year over year to $8.53 billion, with adjusted earnings per share hitting $3.15. Segment margins came in at 23.1%, above Eaton’s own guidance, and orders and backlog climbed sharply across its Electrical and Aerospace business.

More AI Infrastructure Coverage:

Truist cuts Broadcom stock target on rattling Q4 outlook

Veteran analyst says buy Vertiv despite huge gains already

Goldman sees S&P 500 at 8,000 on AI-fueled earnings

Ruiz told investors at Laguna that the globally announced project pipeline Eaton is tracking has accelerated to 342 gigawatts, up from the 307 gigawatts management pointed to on the second quarter earnings call. That figure covers the industry-wide opportunity Eaton is competing for.

Eaton also announced a partnership with Trane Technologies in August to build integrated thermal and electrical systems for the NVIDIA Rubin DSX AI Factory Reference Design, giving it another shot at converting spending per project.

Wall Street is raising price targets

Analyst reaction to Eaton’s second quarter results and the Laguna remarks has been mostly positive. Baird initiated coverage with an Outperform rating and a $500 price target, stating that Eaton is still early in securing AI-driven orders, with cloud demand still making up most of data center sales.

Related: Jim Cramer reveals 6 AI stocks to watch in 2026

RBC Capital raised its target to $512 from $484 after Eaton’s earnings report and pointed to what it described as roughly 15 years of U.S. data center construction backlog. Evercore ISI upgraded Eaton to Outperform from In Line and raised its target to $502 from $453, citing lower execution risk and accelerating earnings.

BMO Capital moved to $487 and Citi to $485. Eaton has an average 12-month price target of $510 with a Strong Buy rating built on 10 buy calls and 1 hold recommendation, with no sell calls. 

The risks investors should still weigh

Anyone thinking about buying the stock should consider a few things. Eaton trades at a P/E of 43, which is expensive for an industrial company that has historically traded closer to 20 times earnings. Much of that premium valuation reflects the AI outlook, so any pullback in hyperscaler spending would hit Eaton faster than rivals.

Ruiz also said 16 of Eaton’s 24 planned manufacturing facilities are now in the launch phase. He described the fourth quarter of 2025 and first quarter of 2026 as the most disruptive period so far. If margins fall during the remaining rollout, its earnings outlook might become uncertain for the rest of 2026 and into 2027.

Investors should also watch the planned Reverse Morris Trust separation of Eaton’s Mobility business that is supposed to close in the first quarter of 2027. The separation is designed so the company can focus on its higher-growth Electrical and Aerospace segments. These two segments sit closer to the AI and defense spending cycles that Eaton’s management expects to drive earnings for the next several years. 

The safer approach for now is to observe order flow in the third quarter earnings report before adding money.

Related: Nvidia just sent a strong signal to AMD and Intel investors

A major risks now is that diesel prices stay high — and continue to put upward pressure on inflation.

The St. Louis Cardinals placed a veteran infielder back on the open market with just a handful of games left in the season.

The tech giants’ job listings could indicate that they are separately pursuing experts in stablecoins and tokenized deposits for future projects.

It’s the first week of bitcoin purchases for Strategy in about three weeks.

Most people think Buffett’s approach only works if you have a lot of money. He has said the opposite. His framework for building wealth started when he was young, broke and working with small amounts. He has also said what he would do today if he had to start over.

At Berkshire Hathaway’s 1999 annual shareholder meeting, someone asked Warren Buffett what he would do if he were getting out of school with just $10,000 to invest.

His answer covered three principles that still apply to anyone building a portfolio in 2026, according to Moneywise.

Rule 1: Only buy what you actually understand

“You have to buy businesses, or little pieces of businesses called stocks, and you have to buy them at attractive prices, and you have to buy into good businesses,” Buffett said.

This is what Buffett calls the circle of competence. You do not need to understand every company in the market. You need to understand the ones you own well enough to answer a few basic questions. How does this company make money? What could threaten its profits? Does it have something that makes it hard for a competitor to take its customers?

More Warren Buffett:

Warren Buffett reveals he broke his own investing pattern

Warren Buffett has a blunt take on today’s market

Warren Buffett pulls no punches on stock market for 2026

If you cannot answer those questions, you do not own the business. You are just holding a ticker symbol.

Buffett has also said investors should be ready for their stocks to fall sharply even when they are right about the business.

At Berkshire’s 2020 annual meeting, he said you should be prepared for a stock to drop 50% after you buy it and still feel comfortable holding it. If that kind of decline would push you to sell, that is a sign you do not understand the company well enough to own it.

Rule 2: Start early and let compounding do the work

“We started building this little snowball on top of a very long hill,” Buffett has said. “We started at a very early age in rolling the snowball down, and of course, the nature of compound interest is that it behaves like a snowball.”

Buffett bought his first stock at age 11. That head start gave his investments decades to grow. One of the most straightforward ways to illustrate this is with a simple example.

If you invest $10,000 and earn an average annual return of 8% without adding another dollar, that money roughly doubles every nine years. After 30 years, it becomes around $100,000. After 40 years, it is closer to $217,000.

The numbers look ordinary until you understand what they mean in practice. Starting at 25 rather than 35 is not just 10 extra years. It is often the difference between having a comfortable retirement and a difficult one. The earlier you start, the less you have to contribute later to reach the same outcome.

The corollary is that waiting for the perfect moment usually costs more than it saves. Nobody times the market perfectly. Getting in early with a reasonable plan tends to beat getting in late with a great one.

Buffett bought his first stock at age 11.Daniel Zuchnik / Getty Images

Rule 3: Look for smaller companies others are ignoring

“I probably would be focusing on smaller companies because I would be working with smaller sums, and there’s more chance that something is overlooked in that arena,” Buffett said.

Large institutional investors often cannot build meaningful positions in smaller companies. If a fund manages $50 billion, a $10 million stake in a small company barely moves the needle. So large funds skip them. That creates a gap that individual investors can use.

Small companies also get less analyst coverage. Less coverage means less scrutiny, which means mispricing happens more often. A patient individual investor willing to do their own research can occasionally find something that institutions have not touched yet.

Buffett used this approach throughout his career. Berkshire Hathaway bought Nebraska Furniture Mart while it was still expanding beyond its home state. It bought See’s Candies when the business was generating roughly $4 million in annual profits.

Neither was a widely followed name at the time. Both became foundational holdings.

The strategy carries real risk. Smaller companies often have thinner margins, less diversified revenue and more vulnerability in a downturn.

The same due diligence applies: understand the business, check the balance sheet, assess the competitive position and make sure the price makes sense.

What Charlie Munger said about getting started

Charlie Munger, Buffett’s longtime business partner, added his own piece to this framework. He said the hardest part of building wealth is getting to your first $100,000.

“The hard part of the process for most people is the first $100,000,” Munger said.

His point was not that everything becomes easy after that. It was that reaching a meaningful pool of capital requires combining investing returns with savings discipline.

Returns compound. But you need capital to compound. The investors who get to $100,000 fastest tend to be the ones who earn more than they spend and stay rational when markets get difficult.

That is a point Buffett has echoed too.

These three rules only work if you actually have money to put into them. Savings rate and spending habits are not glamorous topics. But they determine how much capital you have available to invest, which drives everything else.

Related: Warren Buffett has a stark message for stock market investors

Your day-ahead look for Sept. 21, 2026

Boeing (BA) shares fell again this week. The stock closed at $198.20 on Friday, September 18, down 4.83% over the past five trading days and 12.98% year to date. 

The drop came after comments from CEO Kelly Ortberg at Morgan Stanley’s Laguna Conference on September 16, where he identified new challenges on the 737 and 787 production ramps, and pushed 777X certification testing further into 2027.

Boeing is already under pressure to prove that its turnaround is feasible, and the CEO’s comments only added to investors’ caution. Yet, even with the caution, at least one major bank sees the pullback as a chance to add shares of the plane maker at a discount.

Boeing shares slide after CEO’s warning on 737 and 777X delays

Ortberg told the audience at the Morgan Stanley conference that the 737 production line has not yet stabilized at the 47-jets-per-month rate Boeing had targeted. The delay is due to in-house production of wings, though Boeing said the broader supply chain is holding up. 

On a more positive note, Ortberg said the 737 MAX 10 variant should get its certification “very soon,” and told analysts, “When I left Seattle yesterday, I think we had three deliverables to complete.”

Ortberg also confirmed that certification testing on the 777X, Boeing’s delayed widebody, would extend into 2027. The plane is already about seven years past its original schedule, and its ETOPS certification has been held up by an engine seal issue on the GE Aerospace-built GE9X turbine. 

GE Aerospace (GE) responded that certification can move forward with the existing seals, and said the upgraded parts began shipping in August. Boeing designs and builds commercial jets, defense aircraft and space systems, so any issue in the production ramp affects revenue and the delivery schedules airlines have already committed to.

Boeing (BA) shares slid this week after CEO Kelly Ortberg flagged production and certification hurdles at Morgan Stanley’s Laguna Conference on September 16.John M. Chase / Getty Images

Ronald Epstein calls the market reaction overdone

Bank of America aerospace analyst Ronald Epstein used the selloff to reiterate his Buy rating and $270 price target. Epstein has covered aerospace and defense at Bank of America for over a decade and holds a five-star analyst rating from TipRanks, which makes his call credible with institutional investors.

In a Bank of America Global Research report shared with me, Epstein wrote that Ortberg’s comments triggered about a 7% intraday drop in BA shares and said the market reaction was “a bit dramatic.” He argued that setbacks were expected from the start.

More Aviation and Defense Stocks:

Boeing races to defuse a threat that could ground its comeback

Cramer says investors should consider buying tumbling aviation giant

The winners in China’s missile leap

“We wouldn’t expect Boeing’s turnaround effort to follow a linear path; there will be setbacks on the way up,” Epstein wrote. “Boeing operates in a complex, highly regulated industry and its execution was seriously compromised, so it will naturally take time, but the turnaround is broadly progressing in the right direction,” he said. Epstein’s target implies about a 36% increase from Sept. 18’s close.

Why the SPEEA labor deal matters more than the production noise

Epstein highlighted something else that many traders may have missed. In his view, the more meaningful near-term risk lies with the Society of Professional Engineering Employees in Aerospace (SPEEA), whose current contract expires on October 6. 

SPEEA represents around 17,000 engineers who handle certification safety analysis and paperwork, and their approval is needed for Boeing to keep moving planes through the pipeline. Boeing and SPEEA reached a tentative four-year agreement earlier in September. But members still have to vote to approve it, and a rejection could lead to a strike. 

Related: SpaceX just targeted a key AI supplier: The stock tanked

“We believe the real near-term risk for Boeing lies in a potential SPEEA strike, with the current contract expiring on October 6,” Epstein wrote in the Bank of America report. Even so, Epstein said he is comfortable with BofA’s 2026 free cash flow forecast of $2.4 billion for Boeing. The 737 MAX 10 makes up about 30% of Boeing’s 737 backlog, which is why its certification is very important for future cash flow.

What Boeing investors should weigh next

Ortberg’s comments added to the recent speculation surrounding Boeing, though the underlying direction of the recovery remains the same. Boeing has been delivering more jets in 2026 than at any point since 2018. That pace has not changed.

Boeing’s order book exceeded $695 billion earlier this year, boosted by new 737 MAX commitments from carriers including Turkish Airlines and Flydubai. That backlog only translates to cash flow if Boeing can build and certify the planes on schedule.

That is where the risk lies. If SPEEA members reject the tentative deal, or if 777X testing is delayed again, cash flow forecasts will need to move lower. A 737 MAX 10 certification and an approved SPEEA agreement could change sentiment positively.

Boeing’s record over the past five years shows how easily timelines can change, so investors who buy into the turnaround should keep that in mind. New investors considering Epstein’s call can try investing gradually so you can have a safety cushion in case of any timeline delays or certification problems.

Related: Two defense stocks just got a multiyear vote of confidence

Deployed via Kinetiq’s Markets frontend and led by Volmex CEO Cole Kennelly, Hyperliquid’s new BVIV perpetuals let traders easily go long or short on 30-day bitcoin volatility.

The EU central bank’s new wholesale platform connects DLT market infrastructure to its payment rails, separate from the retail digital euro pilot planned for 2027.