The leaner artificial intelligence models pioneered by China’s DeepSeek will not hit near-term demand for data centres, according to a leading supplier of electrical infrastructure.
“Our indicators tell us that the demand will be very sustained,” said Olivier Blum, chief executive of Schneider Electric, whose shares slumped after DeepSeek last month released an AI model thought to be developed with far less computing power than US counterparts.
Schneider has benefited from surging demand for its data centre products and services in recent years, which tech companies need to power their artificial intelligence models and cloud technology.
Blum said DeepSeek’s release had not changed his business’s predictions for growth in its data centre business in the years ahead.
“Knowing where we’ll be in four or five years is honestly impossible to tell but we’ve invested to support this growth in the next few years,” he said. “The bottleneck is also going to be on the side of manufacturers like Schneider Electric and others being able to meet demand.”
Other energy and electricals groups, including Siemens Energy, Constellation Energy and ABB, were also hit in the sell-off last month, as the International Energy Agency warned that the DeepSeek advances showed current understanding of AI’s power demands amounted to “guesswork”.
Blum said he was confident that DeepSeek’s advances would increase AI uptake and the need for Schneider’s services. “The fact that the technologies that are arriving may be more efficient and more open is good news in terms of adopting this technology,” he added.
Listed in Paris, Schneider operates across the world, with more than a third of sales in North America. The industrial group makes a range of electrical products and services, such as switches and circuit breakers.
About a quarter of the business’s orders were linked to data centres in 2024 and the company has forecast more than 10 per cent annual growth in that segment of its business until 2027.
Shares in the company have risen 30 per cent in the past year and its market capitalisation has surpassed TotalEnergies as France’s fourth-largest listed company, in a sign of the global transition away from oil and gas and towards greater use of electricity.
Blum was speaking as Schneider reported annual revenue of €38bn in 2024, a 6 per cent rise, and operating income of €7.1bn, up 10.5 per cent, ahead of analysts’ estimates. Its shares rose 6 per cent in morning trading in Paris but remain 3 per cent below their level before the DeepSeek announcement.
The increases were “pushed by strong demand in data centres”, said Blum, who took over as chief executive of the group in November, following more than 30 years at the company.
Schneider has made a string of acquisitions in recent years to improve its services, purchasing a controlling stake in liquid cooling company Motivair for $850mn in October.
Blum said further acquisitions to support the company’s offer to data centre builders were unlikely in the near future as the company had “probably the most complete portfolio” on the market.
