Rockwell Automation, Inc. (ROK) | The Buildout — AI Infrastructure

——Mkt cap — · 52-wk —–— · YTD — · delayed
Updated Aug 12, 2026Q2 FY2026 reviewed
Rockwell Automation makes industrial automation hardware, software, and services for data center power and control.
Organic sales +10%
Q3 FY2026 organic growth; ex-data-center growth was still 8%.
Data center >2x YoY
Q2 FY2026 data center sales more than doubled; still low single digits.
S&C margin 34.8%
Q3 Software & Control operating margin above the prior 31–34% corridor.
ARR guide cut
Full-year organic ARR cut to mid-single digits from high single digits.
The Buildout Takeaway
The quarter showed product and software strength across semiconductor, e-commerce/warehouse, automotive, and life sciences, not just data center. The open question is whether still-contracting Lifecycle Services and slower recurring revenue stabilize before rising memory and component costs compress the margin trajectory.
Analyst coverage
39 analysts·12 Buy25 Hold2 Sell
Coverage is thin — only 4 price estimates, so no target is shown
Management guidance
FY2026 reported and organic sales growth 7.5%–9.5% · Adjusted EPS $13.00–$13.30 · Enterprise operating margin 21.5% · Free cash flow conversion ~100% · Organic ARR growth mid-single digits
Important: The Buildout is a data analytics platform. Content is generated by algorithms and AI agents using public filings, earnings transcripts, and market data. This is not personalized investment advice.
Our View

The Verdict

Rockwell Automation makes industrial automation and digital transformation hardware, software, and services. In the AI infrastructure buildout, its most direct role is data center power distribution and control: CUBIC modular power, drives and motor control centers for chiller OEMs, and Logix controllers replacing commercial DDC controls in central utility plants and emergency power.

Market Cap—
Revenue (TTM)$8.8B
Revenue Growth+10.5%
EBITDA Margin (TTM)22.8%
Net Debt$3.6B
Earnings Beats7 of 7
P/E (TTM)—
EV/EBITDA (TTM)—

What We Like

  • Q3 FY2026 organic sales grew 10%, and ex-data-center growth was still 8%, showing demand beyond one AI end market.
  • Software & Control organic sales rose 18% in Q3 after 17% in Q2; Logix growth was above 20% in Q2 and strong double digits in Q3.
  • Four consecutive quarters of incremental margins above 40%; full-year FY2026 incrementals are guided above 50% as-reported.
  • Data center sales more than doubled year over year in Q2 FY2026, with management saying it expects data center to keep growing.
  • Q3 free cash flow was $654 million, up $165 million year over year, with full-year conversion guided at about 100%.

What We’re Watching

  • Lifecycle Services organic sales fell 2% in Q3 FY2026, and its book-to-bill slipped to 0.97; management has not called a turn.
  • Full-year organic ARR growth was cut to mid-single digits from high single digits after Q3 ARR came in at 6%.
  • Memory and component inflation is accelerating; Q4 Software & Control margin is guided down sequentially on flat sales.
  • Management says there is still no broad-based recovery in large capital projects, especially in food & beverage and parts of process.
Bottom Line

The product and software side of the thesis is strengthening, with broad organic growth and strong controller demand. The longer-cycle services and recurring-revenue side is not confirmed, and costs are rising. The open question is whether large projects and Lifecycle Services reaccelerate before memory inflation and new capacity investment pressure margins.

Next upThe next major check is Q4 FY2026 results. That report tests the muted sequential margin guide, Clearpath profitability, and whether services and ARR stabilize.
Last Quarter — Q2 FY2026

Earnings Beat

Rockwell reported Q3 FY2026 sales up 8% year over year and organic sales up 10%, with Sensia dissolution reducing reported sales by about 3 points and currency adding about 1 point. Gross margin was 49.5%, up 70 basis points year over year. Adjusted EPS was $3.49, up more than 20% year over year, and free cash flow was $654 million, up $165 million.

MetricQ2 FY2026Q1 FY2026Q2 FY2025YoY
Revenue$2.2B$2.1B$2.0B+11.8%
Gross margin50.2%48.3%40.1%+1010bps
EBITDA$547M$445M$426M+28.4%
EPS$3.11$2.70$2.22+39.8%
Organic sales growth+10%+9%n/a—
Free cash flow$654M$275M$489M+$165M
If you took everything out that was related to data center, our organic growth would still have been 8% in the quarter, and that’s a good number.— Blake Moret, August 4, 2026

Management tone: Management raised full-year sales and EPS guidance again while cutting full-year organic ARR guidance, reporting a Lifecycle Services decline, and flagging accelerating memory and component inflation. The tone was confident on product-led demand but measured on costs and longer-cycle services.

Management Guidance

Management guided full-year reported and organic sales growth of 7.5% to 9.5%, adjusted EPS of $13.00 to $13.30, enterprise operating margin of 21.5%, free cash flow conversion of about 100%, and organic ARR growth of mid-single digits. Full-year incrementals are guided above 50% as-reported and high 40s organic, with total price expected at about 250 basis points, including about 100 basis points tariff-based, and potential IEEPA refunds excluded from guidance.

Business Trajectory

Trajectory

Revenue trajectory is accelerating in the audited quarterly data, with Q2 FY2026 revenue of $2,239 million up 12% year over year and Q3 management-reported organic growth of 10%. Gross margin expanded from 40.9% in Q3 FY2025 to 49.5% in Q3 FY2026, and enterprise operating margin reached 22.3%, up 280 basis points year over year. The improvement is product- and software-led, while Lifecycle Services remains negative and inflation is building.

Revenue & Margin Trajectory
RevenueGross margin$0$1.0B$2.0B$1.5B$1.5B$1.5B$1.6B$1.6B$1.7B$1.6B$1.7B$1.7B$1.7B$1.6B$1.7B$1.7B$1.7B$1.7B$1.7B$1.4B$1.6B$1.6B$1.8B$1.8B$1.8B$1.9B$1.8B$2.0B$2.1B$2.0B$2.3B$2.2B$2.6B$2.1B$2.1B$2.1B$2.0B$1.9B$2.0B$2.1B$2.3B$2.1B$2.2B42%50%Q3'16Q4Q1'17Q2Q3Q4Q1'18Q2Q3Q4Q1'19Q2Q3Q4Q1'20Q2Q3Q4Q1'21Q2Q3Q4Q1'22Q2Q3Q4Q1'23Q2Q3Q4Q1'24Q2Q3Q4Q1'25Q2Q3Q4Q1'26Q2
RevenueGross margin$0$1.0B$2.0B$1.5B$1.5B$1.5B$1.6B$1.6B$1.7B$1.6B$1.7B$1.7B$1.7B$1.6B$1.7B$1.7B$1.7B$1.7B$1.7B$1.4B$1.6B$1.6B$1.8B$1.8B$1.8B$1.9B$1.8B$2.0B$2.1B$2.0B$2.3B$2.2B$2.6B$2.1B$2.1B$2.1B$2.0B$1.9B$2.0B$2.1B$2.3B$2.1B$2.2B42%50%Q3'16Q4Q1'17Q2Q3Q4Q1'18Q2Q3Q4Q1'19Q2Q3Q4Q1'20Q2Q3Q4Q1'21Q2Q3Q4Q1'22Q2Q3Q4Q1'23Q2Q3Q4Q1'24Q2Q3Q4Q1'25Q2Q3Q4Q1'26Q2
Gross margin as reported.
Share Price — 12 Months
$200$400$052-wk high $495Aug '25NovFeb '26MayAug '26
52-week range $340–$495.
Share Price — 12 Months
$200$400$052-wk high $495Aug '25NovFeb '26MayAug '26
52-week range $340–$495.
The Numbers

The Model

The model projects FY+1 revenue of $9,000 million and EBITDA of $2,151 million, a 23.9% margin. FY+2 revenue is projected at $9,800 million with EBITDA of $2,489 million, a 25.4% margin. The near-term projection is anchored by broad product-led organic growth and Software & Control strength, while the FY+2 step-up assumes continued revenue expansion and margin improvement across the portfolio.

Revenue & EBITDA Projections
REVENUE$8.3B$9.0B$9.8BFY25FY+1 (E)FY+2 (E)EBITDA & MARGIN$1.9B$2.2B$2.5B25.4%FY25FY+1 (E)FY+2 (E)
REVENUE$8.3B$9.0B$9.8BFY25FY+1 (E)FY+2 (E)EBITDA & MARGIN$1.9B$2.2B$2.5B25.4%FY25FY+1 (E)FY+2 (E)
Solid bars are reported actuals; outlined bars are model projections — not company guidance.
MetricFY2025Next FY (E)Following FY (E)
Revenue$8.3B$9.0B$9.8B
YoY Growth—+7.9%+8.9%
EBITDA$1.9B$2.2B$2.5B
EBITDA Margin22.3%23.9%25.4%

Projections are the median of 5 independent model runs. The model’s revenue sits 3.4% above analyst consensus.

Management guided full-year reported and organic sales growth of 7.5% to 9.5%, adjusted EPS of $13.00 to $13.30, enterprise operating margin of 21.5%, free cash flow conversion of about 100%, and organic ARR growth of mid-single digits. Full-year incrementals are guided above 50% as-reported and high 40s organic, with total price expected at about 250 basis points, including about 100 basis points tariff-based, and potential IEEPA refunds excluded from guidance.

What Could Go Right — and Wrong

What good looks like
  • A broad large-project recovery in food & beverage and process turns Lifecycle Services organic sales positive and reaccelerates ARR.
  • Data center grows beyond its low-single-digit revenue base as Logix replacement of commercial DDC controls scales across hyperscalers and contractors.
  • Memory and component inflation stabilizes while price holds, keeping Software & Control margins above the prior 31%–34% corridor.
  • IEEPA refunds materialize and add to reported results outside current guidance.
  • Clearpath reaches profitability in Q4 FY2026 and production logistics continues double-digit growth.
What could go wrong
  • Data center demand turns lumpy, removing the most visible growth call-out while the base remains small.
  • Memory and component inflation persists and price/cost turns structurally negative, pressuring Software & Control margin.
  • Lifecycle Services and ARR continue deteriorating; LS book-to-bill stays below 1.0 and ARR guidance is cut again.
  • Modernization demand normalizes before large projects recover, pulling incrementals toward management's long-term ~35% framework.
  • New Berlin and FY2027 CapEx near 4% of sales land before supporting revenue, pressuring margins and free cash flow.
What’s Next

Looking Ahead

The next 12 months hinge on Q4 FY2026 actuals against the muted sequential margin guide, product-launch cadence, and whether services and ARR stabilize. Management also expects Clearpath profitability in Q4 and may offer more explicit data center sizing when annual vertical splits are updated; New Berlin investment ramps into FY2027 and FY2028.

Catalysts
  • Q4 FY2026Q4 results — Tests muted Q4 margin guide, Clearpath profitability, and whether services and ARR stabilize.
  • FY2027New Berlin investment ramps — Greenfield capacity spending ramps into FY2028; CapEx steps toward roughly 4% of sales.
  • FY2027 annual updateData center sizing disclosure — Management may reconsider explicit data center dimensioning when vertical splits are updated.
Numbers

Financials

Annual Summary

MetricFY2024FY2025TTMYoY
Revenue$8.3B$8.3B$8.8B+1.0%
Gross Margin38.6%47.2%52.5%+852bps
EBITDA$1.5B$1.9B$15.3B+23.2%
EBITDA Margin18.2%22.3%22.8%+402bps
Net Income$952M$869M$1.1B-8.7%
Free Cash Flow$640M$1.4B$10.1B—
Net Cash————

Key Ratios (Trailing)

Valuation
  • P/E TTM—
  • EV/EBITDA TTM—
  • EV/Revenue TTM—
  • Price/FCF TTM—
Profitability
  • Gross Margin (TTM)52.5%
  • EBITDA Margin (TTM)22.8%
  • Net Margin (TTM)12.4%
  • ROIC18.6%
  • FCF Conversion66.8%
  • SBC / Revenue-0.7%
Reference

The Company

Rockwell Automation makes industrial automation and digital transformation hardware, software, and services, combining brands such as Allen-Bradley, Logix controllers, PowerFlex drives, FactoryTalk software, Plex, Fiix, and Clearpath/Otto mobile robots. It describes itself as the world's largest company dedicated to industrial automation and digital transformation. In AI infrastructure, its most direct role is data center power and control: CUBIC modular power distribution, drives and motor control centers for chiller OEMs, and Logix controllers replacing commercial DDC controls.

Rockwell operates in three reportable segments: Intelligent Devices, Software & Control, and Lifecycle Services. It has headquarters in Milwaukee, Wisconsin, two principal distribution locations in the U.S. and the Netherlands, and about ten principal manufacturing facilities in the U.S., Mexico, Poland, India, Canada, and Singapore. The company employs approximately 26,000 people in more than 100 countries and is building a greenfield campus in New Berlin, Wisconsin, backed by a previously announced $2 billion investment in plants, digital infrastructure, and talent.

Business Segments

Intelligent Devices
Hardware-heavy segment
Drives, motion, advanced material handling, safety, sensing, industrial components, and configured-to-order products.
Growth driver: Broad ID adoption; e-commerce/warehouse +30% in Q3.
Software & Control
Home of Logix, FactoryTalk, Emulate3D, Plex, and Fiix
Control and visualization software and hardware, digital twin/simulation, and network and security infrastructure.
Growth driver: Logix growth above 20% in Q2; data center conversion.
Lifecycle Services
Longer-cycle services business
Digital consulting, engineered-to-order solutions, and recurring cybersecurity, safety, remote monitoring, and asset management.
Growth driver: Awaiting large-project capex recovery in food & beverage/process.

Competitive Landscape

Rockwell's 10-K names Siemens AG, ABB Ltd, Schneider Electric SA, Emerson Electric Co., Mitsubishi Electric Corp., Honeywell International Inc., and Dassault Systèmes as major competitors. Management believes the Logix controller franchise is gaining share, with controller unit volume only now returning to pre-COVID levels, and the data center shift from commercial DDC controls to industrial PLCs is a new application category for the core franchise.

  • Siemens AG
    Named in 10-K as a major competitor; no additional discussion in the provided source.
  • ABB Ltd
    Named in 10-K as a major competitor; no additional discussion in the provided source.
  • Schneider Electric SA
    Named in 10-K as a major competitor; no additional discussion in the provided source.
  • Emerson Electric Co.
    Named in 10-K as a major competitor; no additional discussion in the provided source.
  • Honeywell International Inc.
    Named in 10-K as a major competitor; no additional discussion in the provided source.
All rows drawn from the 10-K list of major competitors; Mitsubishi Electric Corp. and Dassault Systèmes are also named in the filing but not separately discussed.

Supply Chain

Rockwell sits between component suppliers and a broad industrial customer base, with principal distribution locations in the U.S. and the Netherlands. No neighbor transcript in the supplied set mentioned Rockwell by name.

Sole Source
Memory and electronic component suppliers
Semiconductors, memory, and other components; several single-source relationships disclosed in the 10-K.
→
Logix controller franchise and DDC replacement
ROK
Designs and manufactures industrial automation hardware, software, and services; sells direct and through distribution.
→
ATS Automation
Leading Logix conversion at a new AI data center in Texas.
Petrobras
Integrated automation services across multiple FPSOs in the Buzios offshore field.
Subaru of Indiana Automotive
OTTO autonomous mobile robots deployment.
NASA
Artemis II ground control systems support.

Analysis updated Aug 12, 2026, reviewing Q2 FY2026. Prices delayed. Built with The Buildout’s published methodology. Not investment advice. No positions held. © The Buildout 2026.

More on ROK: Earnings recap