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ALPHABET SPENDING PLANS BODE WELL FOR EUROPEAN ELECTRICALS

While some big-tech investors are starting to worry about capex plans, Citigroup analysts believe that Alphabet's GOOGL.O spending roadmap bodes well for Europe's electrical equipment makers, companies that are pivotal to the data centre build-out.

Alphabet raised its capex plans for this year by $15 billion to between $195 billion and $205 billion, the company said alongside its earnings on Wednesday.

More importantly, according to Citi, it said it continues to expect capex to increase significantly in 2027.

"With typical lead times of ~18 months we think this underpins ongoing order strength at least into H2’26," writes Citi analyst Martin Wilkie, in reference to Europe's electrical equipment suppliers.

"While Legrand and Schneider do not report orders, we continue to expect both to raise organic revenue guidance for 2026."

Shares in Legrand LEGD.PA and Schneider Electric SCHN.PA are down 0.4% and 0.8%, respectively, on Thursday.

Comments from Alphabet on their TPU system - a family of custom AI chips developed by Google - should be a positive for Halma, Citi says.

"Halma’s recent guidance for +30% photonics growth had disappointed, but Alphabet’s comments should provide some encouragement on phasing into 2027, even though the precise relationship to Halma’s optical control switch revenues remains relatively opaque," they note.

Shares in Halma HLMA.L are little changed on Thursday.

(Samuel Indyk)

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