Chief Executive Officer, ABB
'We have to build new power plants' to meet AI demand, says ABB CEO Morten Wierod
CNBC's “Closing Bell Overtime” team discusses whether the grid can handle the energy needed to meet data center demand and ...
About Morten Wierod
Morten Wierod, CEO of ABB, discussed the company's second-quarter 2026 results during an earnings call on July 16, 2026. He reported that the quarter set new records for both orders and revenues, with good earnings growth, solid margin improvement, and strong cash flow, stating that "things progressed more or less as planned" and that the company delivered on its guidance. Wierod highlighted three recently announced acquisitions, including the Italian company Special Trasfo, which specializes in medium voltage transformers, and noted that combined they would add approximately 3.5% to ABB's 2025 revenues. He clarified that ABB is "not going back into the general power" with the Special Trasfo acquisition. Regarding the data center market segment, Wierod addressed questions about the sustainability of order intake, stating that the company sees a "very strong pipeline" and that large customers have clear capital allocation and investment plans. He noted that ABB does not take orders it cannot commit to executing on schedule. On the topic of acquisition multiples, Wierod said that at a 19.5 times multiple, the company sees synergy opportunities—primarily commercial and growth-related—that would bring the multiple into the mid-teens, and that the acquired business is "a high performing business" that will be accretive to earnings per share in the second year.
Transcript (13 segments)
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Narrator0:00
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Interviewer0:04
Welcome back to overtime. Outsize numbers being thrown around regarding AI and data center build outs, including OpenAI's $850 billion expansion. That's equal to the output of 17 nuclear plants. But how is the energy grid going to handle the added load and who will ultimately pay for the increased consumption? Well, joining us right here on set is ABB CEO Morten. Morten, it's great to have you. Welcome.
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Morten Wierod0:26
Thank you.
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Interviewer0:27
So this is one of the areas that you play in is electrification, automation and sort of building out and modernizing of the grid. What are you seeing particularly here in the US which is a big growth market for you?
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Morten Wierod0:39
Yeah. ABB we're helping both integrating more of that energy into the grid, but also looking at the demand side, helping that build out data centers where a lot of that new energy is being consumed. And what we see at the moment is a massive expansion of energy before, like from 2010 to 2020, it was pretty flat. Consumption since then is really starting spiking up. And that is what we see also for the next ten, 15 plus years as strong increase. And that means it really puts a lot of stress on the power grid. And we do need more power, but we also need power at the right time. And that is where we come in with more automation being able to balance that. When you put that energy comes from nuclear, it can come from LNG, from gas or from renewables. There are many sources to get that electricity flowing, but that's the outcome that is needed on the other end. That's what we help, both integration and making it available reliable, and later on, I think more and more the topic of being affordable for the consumers, which is one of the key topics in the coming years.
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Interviewer1:38
In terms of those demand signals. Natural gas. Nuclear. Where are you seeing that and what does it mean in terms of demand for your piece of the infrastructure pie?
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Morten Wierod1:46
Yeah, for us, the biggest part is right now is on the LNG. That's a massive big investment, especially in Texas. New capacity coming, new terminals being built. So we are involved both from fracking to pipelines and to the terminals and even on the LNG ships that come and get that and deliver this overseas when that is needed. So this is a complete value chain where we as a company are involved in all of those processes, both on the automation side and the electrification side, because everything in these companies, even if it's LNG and fossil, it is electric. That is the outcome. And the reason you need all the gas is to have more electricity to boost the power grid and make sure that we can all have the right temperature in our houses, but also that those data centers never shut down.
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Interviewer2:33
ABB Swiss company multinational, operates in regions across the world right now. How much of your investment is going into the US versus the rest of the world right now?
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Morten Wierod2:44
US is by far the biggest receiver of capital in the company right now. Last week we announced an announcement about $110 million going into new capacity here in the United States. We have a very what we call a local for local strategy. We are a global company but we serve customers locally. So about 80% of what we sell here in the United States is produced in the United States.
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Interviewer3:08
Haven't been hit too hard by tariffs.
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Morten Wierod3:09
No, this is how we have dealt with tariffs and trade barriers for many, many years because we are local in Europe, we are local in China, we are local in India, and we are local here in the United States. So this is one of the most important things for us during the years of COVID and a lot of the shutdowns, and that served us well. And we have just continued to accelerate those local investments so we can really be local for local in every area we operate.
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Interviewer3:34
On all this AI data center talk. Just a practical question. Is it even physically possible to stand up multiple gigawatt scale data centers, both in the US and around the world within five years?
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Morten Wierod3:47
It is possible because it is today. There is quite a lot of capacity in the grid available. But electricity is a bit like the highways. There is more than enough roads in the country, there should never be traffic. The problem is the peak hours when everybody wants to use it. That's the same in the electric network. So what we're looking at: can we build data centers? Take one of the larger ones being built here in the United States now is up in North Dakota because there is available energy, but they don't have transmission capacity to get that electricity to New York, for example. So that's why you build data centers in special jurisdictions. It's the same we see in Europe. My home country of Norway, in the north of Norway, a lot of hydropower available but not enough transmission capacity to the south where it's needed. So therefore, that's where OpenAI and Stargate build the biggest data center in Europe. We're planning to build the biggest data center in Europe. So this is happening all over the world. But in the next years, this reserve capacity that sits in the network will soon run out, especially during peak hours. So more capacity is needed there. Will we have to build new power plants? One of these new big data centers we talk about one gigawatt. To put that in perspective, that's like one nuclear power plant is normally around 1.2 GW.