Eaton vs BWXT: Two Ways to Own the Power Layer of AI

It Starts With Electricity, Not Chips

When I write about AI, I usually reach for chips first. This time I want to flip the order and begin where everything actually starts — with electricity.

Before an electron leaves the grid and reaches a server, it has to pass through a specific set of equipment: the switchgear, the transformers, and the backup power that keeps a data center alive. Two companies sit on that path — Eaton and BWX Technologies — and after June dragged both of them down with everything else, this is exactly where my attention is.

Eaton: One Year of Data-Center Building Opens a Market Bigger Than the Whole Company

Here is the number that completely reframes Eaton for me: about $3.4 million of Eaton electrical content goes into every megawatt of AI compute that gets built.

The industry is on track to build roughly 13.6 gigawatts of new data centers this year alone. Do the math and a single year of construction puts around $46 billion of electrical equipment up for grabs. Eaton's entire company did about $27 billion in revenue last year. So one year of data-center build-out opens a market bigger than the whole business was last year.

It is already showing up. Eaton's data-center orders grew about 240% over the past year, and it is carrying close to a year of sales in backlog.

There is a part that looks alarming until you look a little closer. Last quarter the headline operating margin dropped to about 15%, which reads like the business is cracking. But that was the cost of the acquisitions Eaton was closing. Underneath it, the core electrical business ran a 22.7% margin, with record adjusted earnings and raised guidance.

Step back and the transformation is the real story. Six years ago Eaton was a 13%-margin industrial doing about $21 billion in revenue. Today it does over $27 billion at nearly 20%. As the top line grew, the margin nearly doubled — so profit grew even faster. It earns a premium now, and a pullback like this one is the window to start building the position.

BWXT: The Only Nuclear Name That Actually Makes Money

Across the whole nuclear theme, the one name I would actually buy on this pullback is BWX Technologies. The reason is simple: it is the only profitable company in the group, and the sole manufacturer of the reactors that run on every US Navy submarine and aircraft carrier.

When nuclear sold off this spring, the gap showed up fast. Hyped pure plays like Oklo and NuScale came down about 30%, while BWXT gave back only roughly 17% — and from a base that had been climbing while the others fell. BWXT already builds reactors and gets paid for it. The others are still years away from their first one. One side is building; the other is still betting.

The Navy is only the foundation. BWXT quietly runs four different nuclear businesses under one roof. It is building the reactor pressure vessel — the single largest piece — for one of the first small modular reactors going up in North America. It makes the TRISO fuel for Kairos Power, the company building a reactor to help power Google. And its medical arm produces isotopes for cancer treatment, from TheraSphere for liver tumors to actinium-225, one of the most promising targeted cancer isotopes being made today. So you are buying a defense monopoly, a piece of the nuclear renaissance, an AI power supplier, and a cancer-treatment business all in one.

The work is book-solid. BWXT carries a record $8.6 billion backlog, up 77% in a single year, against a company that does under $4 billion in revenue — more than two years of work already locked in. You can see it flowing through to cash: free cash flow went from about $46 million in 2023 to nearly $300 million in 2025, and it guided higher again this year.

The only real catch is the price. It trades near 43 times forward earnings on a low-double-digit grower. The quality is not the question — the entry is. That is why a pullback like the ones we have been getting is how you get a better entry.

Putting the Two Side by Side

Factor	Eaton (ETN)	BWXT
Role	Data-center electrical gear (switchgear, transformers, backup)	Navy reactor monopoly + SMR + medical isotopes
AI exposure	Data-center orders +240%	SMR pressure vessel, fuel for a Google-power reactor
Spring pullback	Fell with the market	About -17% (peer pure plays -30%)
Backlog	Roughly a year of sales	$8.6B, more than two years
Valuation	Re-rating as margin went 13% to 20% in six years	~43x forward (low-double-digit growth)

The key for me is that both are power infrastructure that gets paid whoever wins AI. Eaton is the larger, steadier anchor; BWXT is the monopolistic but pricier one. My conclusion is clean: the quality is proven on both, the only variable left is entry price — which is exactly why I welcome a pullback like this one.