Morton Wierod, ABB CEO, joins 'Closing Bell Overtime' to talk the AI infratructure buildout, growth opportunity,

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The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

ABB CEO Morten Fiorod stated that the company is not seeing any slowdown in AI-related spending, particularly in the data center sector, which remains strong globally, especially in the United States. Fiorod emphasized that electrification and automation are major growth trends worldwide, with ABB well positioned to benefit from these shifts.

During its capital markets day, ABB announced updated guidance, including the restructuring of its business into three core areas and the sale of its robotics unit to SoftBank. The company also increased its operational EBITA margin target, reflecting confidence in long-term growth and profitability.

ABB CEO: We're not seeing any slowdown of AI spend

Is a B.B. CEO Morton Fiorod as the company wraps its capital markets day. Morton it's great to have you back on the show. Welcome. Thank you. So I do want to start with this. This big question because it is dominating so much of what we're seeing and hearing across the market and across companies and industries. And that is whether there's frothiness in all of this spending that we're seeing in A.I. whether the return on investment is ultimately going to be worth it and whether all of this builds out into A.I. infrastructure is going to be overdone. A.B.B. is clearly well positioned to capture some of that spending. What are you seeing on the front lines right now. We see very strong activity in the data center segment. So the A.I. build out of new capacity is happening all over the world of course especially here in the United States. So we don't see any any slowdown at the moment. It's more getting ready for what's to come in the next two or three years. And then after that we're talking about new technology that we are also helping companies like NVIDIA with those new architecture or these massive data centers that being planned out. So we we don't see any any slowdown but it are massive numbers and really big numbers we're talking about. So I guess that's the uncertainty that that is reflecting also in today's discussion. Yeah. And whether it's electrification whether it's the data center opportunity whether it's some of the other areas of industrial automation that you're focused on. What are you seeing in geographies in different end markets across the world right now and how reflective is the growth picture in those markets of what of this A.I. arms race. What we see is a massive trend towards electrification and automation overall. You know electricity as an energy source is is growing more than double the pace of any other energy source. So and that doesn't matter if we're talking about buildings industries or on transportation. So that's the kind of the future is clearly electric. And that goes also across the board in the Americas in Europe and also in Asia. So these are the long term trends. So therefore we as a company are very well positioned in this market and therefore also coming up when we had our capital market day here today in New Berlin in Wisconsin. We're also talking about strong market but also ABB as a strong company doing well over the last years. But the best is yet to come for us because we are very confident about the market but also our own position. Morten particularly in electrification how exposed is ABB to a potential downshift not pause but downshift and just velocity of data center demand with everything that could happen in the global economy. Well data center is an important part for us. It's the fastest growing market but we also have to recognize it is I would say only 7 percent of the overall business for ABB. So I love a data center market because it's it's really high growth but it's not the only one. And all markets are really going electric these days. That means that we are able to grow strongly when we talk about power generation or utility. We need stronger grids all over the world. The grid the power grid is getting outdated and unreliable. Unfortunately too many places in the world. That's a great opportunity for us for ABB can help with technologies there. And that is the opportunity that we have in front of us. And we want to help that whole industrialization trend that we see that is really driven by electrification. So that is where ABB can be a major helper to make that happen. Yeah. And of course today you issued updated guidance. You put more detail around the restructuring of the portfolio into three specific areas. You're also selling your robotics unit to SoftBank. So what does that unlock. It gives us as ABB a very focused portfolio now with three what we call business areas of ABB with electrification or motion and automation. Those three units fits very well together. So it's a focused and a streamlined portfolio that gives that long term growth ambition that we have as a company with 5 to 7 percent growth over the cycle which is more of a maybe a 10 year period. So we are very confident confident about the future growth but also updated over profitability targets today giving and increasing those from the 16 to 19 that we had in the past now to 18 to 22 percent of operational EB day for the whole ABB group. So I believe that we are in a strong position. And as I said the best is yet to come.

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ABB CEO: We're not seeing any slowdown of AI spend

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