Xylem Inc. (XYL): 2Q results mostly as expected but data center momentum appearing to build while margin expansion remains intact

研报英文原文证据摘录

Xylem Inc. (XYL): 2Q results mostly as expected but data center momentum appearing to build while margin expansion remains intact

Goldman Sachs Xylem Inc. (XYL)

estimates of $5.52/$5.55, while also raising adj. EBITDA margin guidance to

23.1%-23.5% (from 22.9%-23.3%), compared to GSe of 23.2%.

n Data center opportunity continues to scale, with WSS emerging as the larger

long-term beneficiary. Management highlighted continued momentum in data

center-related demand, with Applied Water data center orders increasing more than

300% yoy in 2Q and FY26 data center revenue expected to grow ~200% yoy. While

still a relatively small contributor today, management expects direct data center

exposure to exit 2026 at a run-rate of ~2% of company revenue, with the majority of

that contribution occurring in 2H, implying a stronger run-rate entering 2027. Near

term, Applied Water remains the primary beneficiary of data center-related

demand, however, in the longer term WSS presents the greater opportunity given its

exposure to water management solutions supporting data centers, power

generation and semiconductor facilities. While data centers are expected to

represent ~2% of revenue exiting 2026, that figure reflects direct data center

exposure and likely understates the broader opportunity set associated with

AI-driven infrastructure investment.

n Electric metering delays weigh on near-term growth, though underlying water

demand remains healthy. Management narrowed FY26 organic revenue growth

guidance to 2%-3% (from 2%-4%), driven primarily by delays in electric metering

deployments within MCS. According to management, utilities are becoming

increasingly cautious around capital spending amid affordability concerns,