Eaton Corporation plc (ETN) Dropped Due to Concerns Over Impact on AI Supply Chain from Slower Data Centre Expansion

Yahoo

20-05-2025

Carillon Tower Advisers, an investment management company, released its 'Carillon Eagle Growth & Income Fund' first quarter 2025 investor letter. A copy of the letter can be downloaded here. The S&P 500 Index ended Q1 down 4.3%, marking a turbulent start to 2025. The volatility that began in February was triggered by factors including policy uncertainties, economic deceleration, and AI investment sustainability concerns. The market's first intra-quarter drawdown exceeded 10% in 28 months. Adding to the uncertainty, the 10-year U.S. Treasury yield declined from 4.8% to 4.25%, leading to an equity market rotation favoring defensive sectors, quality stocks, and dividend-yielding equities over growth and momentum-driven investments, with top-performing sectors like energy, healthcare, and consumer staples. Moreover, the quarter saw market participation broaden, with index leadership shifting from mega-cap technology companies to a more diverse base of stocks, as evidenced by the S&P 500® Equal Weight Index's outperformance. Additionally, you can check the fund's top 5 holdings to determine its best picks for 2025.
In its first-quarter 2025 investor letter, Carillon Eagle Growth & Income Fund highlighted stocks such as Eaton Corporation plc (NYSE:ETN). Eaton Corporation plc (NYSE:ETN) is a global power management company. The one-month return of Eaton Corporation plc (NYSE:ETN) was 23.37%, and its shares lost 2.21% of their value over the last 52 weeks. On May 19, 2025, Eaton Corporation plc (NYSE:ETN) stock closed at $329.29 per share with a market capitalization of $128.85 billion.
Carillon Eagle Growth & Income Fund stated the following regarding Eaton Corporation plc (NYSE:ETN) in its Q1 2025 investor letter:
"Pressure on Eaton Corporation plc (NYSE:ETN) shares stemmed from concerns about the possibility that reduced capital spending in the data center market could affect the entire AI supply chain. As a critical supplier of power connection products, the company's multi-year growth prospects are affected by overall data center capital spending trends that continue to be favorable."
A technician standing in the middle of a power station, inspecting a power distribution system.
Eaton Corporation plc (NYSE:ETN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 88 hedge fund portfolios held Eaton Corporation plc (NYSE:ETN) at the end of the fourth quarter, compared to 90 in the third quarter. Eaton Corporation plc (NYSE:ETN) reported revenue of $6.4 billion and adjusted EPS of $2.72 representing a 13% increase from the previous year. While we acknowledge the potential of Eaton Corporation plc (NYSE:ETN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered Eaton Corporation plc (NYSE:ETN) and shared the list of stocks Jim Cramer got misjudged. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.