How I Made $5000 in the Stock Market

Schneider Electric Is a Poorly Performing AI Play. Don’t Give Up on the Stock.

Nov 11, 2025 10:45:00 -0500 by Al Root | #Follow-Up

Barron’s picked Schneider Electric in October 2024. Things haven’t worked out—yet.

Through Friday trading, Schneider Electric stock was down 4% year to date. (Benjamin Girette/Bloomberg)

Key Points

Picks-and-shovels plays are a time-tested way for investors to profitably gain exposure to a market trend. They don’t always work. Identifying a theme is great, but there is rarely a substitute for strong business execution.

Barron’s picked Schneider Electric stock in October 2024, with shares at about €240. It was a picks-and-shovels play on AI. Shares haven’t performed as expected, but there is still a lot to like about the company.

Schneider is a well-run European industrial company that makes electrical hardware and software. Its products cover everything from the home to the utility, and importantly, to the AI data center. American investors can think of it like the Eaton of Paris.

The words “AI data center” excite most investors these days—for good reason. AI chip pioneer Nvidia and the rest of the Magnificent Seven stocks are valued at almost $22 trillion, up more than $5 trillion over the past 12 months, now accounting for roughly 35% of the entire value of the S&P 500 .

AI optimism has impacted more than the Mag Seven. The data center buildout boom has been a boon to industrial stocks supplying electrical infrastructure. And power-hungry data centers need electricity, giving utility stocks a boost. It’s made shares in both sectors a picks-and-shovels way to play AI.

“Picks and shovels” refers to those who made money during the 19th-century California gold rush. It was the sellers of equipment to gold miners; most gold miners didn’t end up rich.

AI tailwinds should have meant outperformance for Schneider shares. It hasn’t happened yet.

Since Barron’s call, Schneider’s was down 3% through Monday trading. That’s frankly terrible. Shares of Eaton were up 10%. The S&P 500 was up 18%. Shares of Amphenol, Vertiv, and nVent, three industrial suppliers of AI-related equipment, were up an average of 79%.

There are a few things to blame. For starters, there was some turmoil at the top. Schneider replaced its CEO in November with Olivier Blum replacing Peter Herweck, citing divergences in the company’s strategic direction.

A surprise change is always jarring for investors. Tariffs also weighed more heavily on Schneider than on its peers. Schneider’s operating profit margins in the first half of 2025 declined by about half a percentage point year over year. Eaton’s expanded by about half a percentage point.

Schneider’s falling margins led to falling earnings estimates, the ultimate headwind for a stock. At the start of 2025, Wall Street expected Schneider to earn about €9.50 a share. That estimate is now closer to €8.60. Estimates for data center infrastructure provider Vertiv have gone in the opposite direction. Wall Street expects 2025 earnings of approximately $4.10, up from around $3.50 at the start of 2025.

A greater portion of Vertiv’s business is directly related to AI. Sales are projected to increase by 28% in 2025. Schenider’s sales are expected to grow a more modest 5%.

Investors have to pay up for better growth. Shares of Vertiv, which Barron’s also picked in August 2024, trade for about 34 times estimated 2026 earnings. Schneider stock trades for 23 times, down from about 25 times a year ago. The good news for Schneider investors? It is still growing earnings, by a meager 3% in 2025, but by a much faster 14% a year on average between 2025 and 2027, according to FactSet. Schneider grew earnings by about 9% a year on average between 2019 and 2024.

That growth, at a reasonable price, is the reason to stick with the stock. Electricity and AI trends are still intact. The onus in 2026 is on Schneider management to improve business execution.