← back to rankingEMR · Emerson Electric Co.
Industrial - Machinery · mkt cap $79.6B · calls: Q2 FY2026 vs Q1 FY2026
25.0 conviction · conf-adj 25
conf 3/10 partial
enthusiasm:21.0 · trend:-5 · quantifies:0 · impact:0 · under_radar:5 · credibility:0 · business_impact:4 · disruption:0 · commitment:0 · confirmation:0
Enthusiasm latest 7 / prev 8 (falling)
Emerson's AI thesis is that AI is both a demand driver for power automation and an embedded capability inside NI, Ovation, DeltaV and AspenTech software. The previous call was more promotional and concrete around Nigel.ai and AI data-center wins, while the latest call became more defensive and explicitly said AI is not yet producing meaningful revenue. Credibility is moderate: management cites real deployments, product releases and project wins, but direct financial attribution remains limited.
GROUNDED NEXT-FY IMPACT vs CONSENSUS
Grounded on actual base — revenue $18.0B · net income $2.3B · net margin 12.7% · diluted EPS 4.04
These are next-fiscal-year annual uplift estimates, not next-quarter numbers.
Aggregate next-FY est. rev uplift: % · next-FY EPS uplift: % · vs analysts: inline · priced in: medium · confidence: 3/10
| Claim | Figure | Arithmetic | Next-FY Rev % | Next-FY EPS % |
|---|
AI-enabled workflow productivity: hours→minutes
productivity · soft | hours to minutes | No disclosed $ saving, affected cost base, process volume, or FTE count anywhere in claims; 'hours to minutes' is a process-time anecdote with no base obtainable → cannot compute after-tax saving (saving*0.79 / $2,293M NI). Unanchored. | | |
1.7 GW AI data center power-automation win
revenue · soft | 1.7 gigawatt | 1.7 GW is the data center's power capacity, not Emerson's contract value. Emerson sells automation INTO the AI buildout (supplier-side). No contract $ disclosed → no next-FY revenue conversion against $18.016B revenue. | | |
Ovation orders up 74% (data centers / utility power demand)
revenue · soft | up 74% | ORDERS/bookings, not revenue (bookings≠revenue), and no Ovation baseline order/revenue $ disclosed to apply 74% to, nor the AI/data-center-attributable share. Supplier-side. Cannot size next-FY revenue against $18.016B. | | |
AI revenue impact 'not meaningful' yet
revenue · soft | not meaningful | Management explicitly states AI is early and not yet translating into meaningful revenue; no figure given. Adopter-side software (Nigel/DeltaV) upside deferred to '2027 and beyond'. | | |
Assumptions: Current FY2025 base: revenue $18.016B, GAAP net income $2.293B, net margin 12.73%, diluted shares ~566.7M. Tax rate 21%; default incremental margin = current net margin (higher for Nigel/DeltaV software ACV) if a $ figure existed. Any EPS% would be sized off the adjusted earnings basis consensus uses (~$3.40B adj. NI / ~$6.00 adj. EPS), NOT the depressed GAAP base — but no claim is anchored, so no EPS math executes. Bookings/orders not treated as revenue without disclosed conversion. Supplier (1.7 GW, Ovation orders) excluded from adopter headline per ranking rule.
Top line: No adopter-side AI revenue is quantifiable. The two topline AI items are supplier-side AI-buildout demand: a 1.7 GW data-center automation win (GW = customer power capacity, no Emerson contract $) and Ovation ORDERS +74% (bookings, not revenue; no base disclosed). Both feed backlog/future revenue but cannot be converted to a next-FY % here. Management says AI-specific revenue is 'not meaningful' currently, a differentiator only 'into 2027 and beyond'.
Bottom line: The only adopter-side lever is the 'hours to minutes' productivity claim, with no $ saving or FTE base to size — after-tax-saving math (saving*0.79 / $2,293M NI) is impossible without a number. Note GAAP NI ($2,293M) is depressed vs the ~$3.40B adjusted base consensus uses, so any EPS% off GAAP would be inflated regardless. No bottom-line uplift can be credibly booked.
[impact n/m (all claims soft/unanchored)] Consensus FY2026 revenue is $18.828B vs FY2025 $18.016B, up $811.8M or 4.51%; consensus adj. EPS $6.504 vs $6.001, up 8.39% — part of which reflects the same data-center/power demand driving Ovation orders, i.e. the supplier-side tailwind is partially in the numbers. The adopter-side AI impact (the ranked dimension) is ~0 by management's own 'not meaningful' admission, so there is no quantified gap above consensus to exploit. Optionality sits in 2027+.
MODEL CONSENSUS (impact)
partial
All claims unanchored/soft; both agree no quantifiable adopter-side AI uplift. Topline items are supplier-side buildout demand, partly already in consensus.
Conflicts reconciled
- reasoning rev growth: X=4.24% (18,062 base) vs Y=4.51% (18,016 base) -> used 4.51% because it uses the consistent disclosed $18.016B FY2025 base
- vs_analyst_expectations: X=inline vs Y=unclear -> used inline because X better justifies it (adopter AI ~0 = no gap above consensus)
- confidence: X=3 vs Y=4 -> used 3, lowered per conservative tie-break on the verdict conflict
| Field | Opus 4.8 | GPT-5.5 |
|---|
| Rev uplift % | – | – |
| EPS uplift % | – | – |
| Priced in | medium | medium |
| vs analysts | inline | unclear |
| Confidence | 3 | 4 |
| Top line | No adopter-side AI revenue is quantifiable. The two topline AI items are supplier-side AI-buildout demand: a 1.7 GW data-center automation win (GW = the customer's power capacity, no Emerson contract $) and Ovation ORDERS +74% (bookings, not revenue; no base disclosed). Both feed backlog/future revenue but cannot be converted to a next-FY % here. Management says AI-specific revenue is 'not meaningful' currently, a differentiator only 'into 2027 and beyond'. | No adopter-side revenue uplift is quantifiable. Supplier-side AI exposure is real but unpriced from the inputs: 1.7 GW capacity and Ovation orders up 74% do not disclose contract dollars or revenue conversion. |
| Bottom line | The only adopter-side lever is the 'hours to minutes' productivity claim, with no $ saving or FTE base to size — after-tax-saving math (saving*0.79 / 2,293M NI) is impossible without a number. Note: GAAP NI ($2,293M) is depressed vs the ~$3.40B adjusted base consensus uses, so any EPS% off GAAP would be inflated regardless. No bottom-line uplift can be credibly booked. | The productivity claim could be valuable, but 'hours to minutes' has no disclosed labor/process cost base, so EPS uplift versus $2.293B net income is not calculable. |
| Reasoning | Consensus already embeds FY25→FY26 revenue +4.24% (18,062M→18,828M) and adj. EPS +8.39% (6.001→6.504), part of which reflects the same data-center/power demand driving Ovation orders — i.e. the supplier-side tailwind is partially in the numbers. The ADOPTER-side AI impact (the ranked dimension) is ~0 by management's own 'not meaningful' admission, so there is no quantified gap above consensus to exploit. Not the interesting (under-priced) case near-term; optionality sits in 2027+. | Consensus FY2026 revenue is $18.828B, up $811.8M from FY2025 revenue of $18.016B, or 4.51%. Consensus FY2026 EPS is $6.50419 versus FY2025 consensus EPS $6.00096, up 8.39%. The quantified AI claims provide no calculable adopter-side revenue or EPS uplift to compare against that trajectory; management also says current AI revenue is not meaningful, implying no clear upside gap yet. |
Rows highlighted where the two models disagreed.
QUANTIFICATIONS
AI-enabled workflow productivity: hours to minutes (Q1 FY2026 product update, bottomline)
“Processes that previously took hours can now be completed in minutes.”
AI data center power project capacity: 1.7 gigawatt (Q1 FY2026 project win, topline)
“First, Emerson Electric Co. was chosen to automate on-site power generation for a new 1.7 gigawatt AI data center in The United States, helping to meet accelerated deployment timelines and mission-critical reliability.”
Ovation orders tied to power demand including data centers: up 74% (Q1 FY2026, topline)
“Orders in our Ovation business were up 74%, driven by large project wins, including behind-the-meter data centers and fleet modernizations for major utility customers.”
AI revenue impact: not meaningful (Q2 FY2026 current, topline)
“I would say it's a little early for it to translate into meaningful revenue opportunities.”
PAST (realized)
- Emerson recently deployed an AI-driven optimization solution for Aramco, one of the world's leading integrated energy and chemicals companies.
- In January, our Nigel AI advisor was one of 13 products recognized as a 2025 product of the year by electronic product design and test.
- First, Emerson Electric Co. was chosen to automate on-site power generation for a new 1.7 gigawatt AI data center in The United States, helping to meet accelerated deployment timelines and mission-critical reliability.
CURRENT (now)
- Further, we are well positioned to benefit from embedding AI in our solutions.
- I mean I think a lot of customer interest, not only on Nigel on the NI side but certainly the capabilities we've launched on Ovation, DeltaV as well as AspenTech.
- I would say, frankly, we do believe that it is a differentiator for us and we are seeing a lot of activity, particularly in the Ovation business in terms of customer dialogue and a lot of quotes around AI.
- So the threat of AI disrupting our software business is very minimal as we see it today.
FORWARD (guidance)
- This represents a great opportunity for Emerson as we advance the journey to autonomous operations.
- I would say it's a little early for it to translate into meaningful revenue opportunities.
- But I think as we progress into 2027 and beyond, I think it will be a huge differentiator for us.
- And really as a counterpoint, AI capability we're building into our software should frankly accelerate the growth.
- So we see AI and all the AI capabilities we launched, not just with Nigel, but also the capabilities, innovation and DeltaV should be a net accelerator for software offerings, and that's really what we expect to see with continued ACV growth.
TRACK RECORD — PROMISE vs DELIVERY
—/100 (no quantified promises) no-quantified-promises 6 calls reviewed
Across all six calls Emerson showcased genuine AI/autonomy substance — the Ovation Gen-AI Virtual Adviser, Nigel.ai test author, Guardian Adviser, AspenTech hybrid/optimization models, an 'engineer the autonomous future' vision and an Aramco AI optimization deployment — but every AI reference is either a qualitative product launch or a backward-looking adoption note. The only quantified targets management committed to (~10%+ ACV software growth, Ovation orders up ~20-30%, $21B revenue/$8 EPS/30% margin by 2028) are broad financial or power-demand goals, not AI-specific promises tied to a number-plus-date for an AI capability, so there is no judgeable AI promise-vs-delivery track record.
PRICED-IN (REFINED)
MEDIUMEst. revisions falling · Fwd P/E 25.9 · EV/Sales 5.0x
AI claim maps to Software and Control, Intelligent Devices
Estimate-revision momentum is falling: strongBuy/buy counts declined from 21 in January 2026 to 17 in June 2026, while price targets are not in a clean upward sequence since the last-year average exceeds recent averages. Valuation is rich for a mature industrial machinery company at 25.9x forward EPS and about 5.0x EV/Sales, so some AI/automation upside is already embedded despite weaker revisions. The AI thesis would most plausibly flow through Software and Control and Intelligent Devices, but rich valuation plus falling revisions makes the priced-in verdict medium rather than high.
COVERAGE — ENTHUSIASM TRAJECTORY + CATALYSTS
6Q1 FY20252Q2 FY20259Q3 FY20258Q4 FY20259Q1 FY20269Q2 FY2026
AI enthusiasm across 6 calls — trend ↗ rising
AI moved from edge-data enablement to named AI advisers, autonomous operations, customer deployments, and measurable workflow productivity.
RECENT AI CATALYSTS & NEWS
BUSINESS IMPACT - QUALITATIVE MATERIALITY
6/10 qualitative impact moderate medium-term · mixed evidence
Where AI matters: industrial automation software and autonomous operations
Emerson has real AI-enabled product work in NI/Nigel, Ovation, DeltaV and AspenTech, including an Aramco optimization deployment, so this is more than generic productivity tooling. But management explicitly says AI is not yet translating into meaningful revenue, and much of the quantified AI excitement is supplier-side data-center/power demand rather than adopter-side monetization.
Caveats: AI revenue attribution remains unproven and deferred to 2027+; Supplier-side AI data-center wins should not be confused with own-business AI adoption upside; Industrial customers may adopt slowly due to safety, validation and integration requirements; Software AI features could become table stakes rather than premium-priced differentiators
AI DISRUPTION / CANNIBALIZATION RISK tailwind · 2/10
AI does not plausibly automate away Emerson's core installed base of process controls, instrumentation, safety-critical automation and domain-specific industrial software. Generic AI may pressure some analytics/advisory features, but Emerson's value is tied to trusted control systems, plant data, engineering integration and reliability rather than easily commoditized content or labor hours.
OPTIONS / MARKET STRUCTURE
option liquidity: good
proxy inputs — dollar-ADV $424M · beta 1.255 · px $142.03
source: proxy (no options chain on FMP)
FMP /stable/ exposes no options-chain endpoint on this key, so ATM IV, bid-ask spread and open interest are unavailable. Liquidity below is a PROXY from dollar-ADV, beta and price level (a stand-in for option depth), not measured option-market data.
CONFIRMATION — INSIDERS · 13F · LANGUAGE
Undercutting — insiders selling, institutions flat, management language 5/10 measured.
INSIDERS selling 7 open-market sell(s) vs 0 buy(s) — net distribution
INSTITUTIONS (13F) flat as of 2026-03-31: 158 new / 187 closed positions; 931 increased / 878 reduced; institutional ownership -1.39pp; -29 net 13F holders
MGMT LANGUAGE 5/10 measured AI discussion is brief: one concrete deployment, but mostly opportunity framing and positioning rather than quantified business impact.
commit “Emerson recently deployed an AI-driven optimization solution for Aramco, one of the world's leading integrated energy and chemicals companies.”
commit “Emerson's Aspen Hybrid Models were integrated into Aramco's existing refinery planning network”
hedge “we are well positioned to benefit from embedding AI in our solutions.”
VERBATIM AI QUOTES
“Finally, I want to highlight the strength of our differentiated industrial software portfolio to address concerns in the broader software market regarding AI.”
— Surendralal Karsanbhai, Q2 FY2026
“Further, we are well positioned to benefit from embedding AI in our solutions. This represents a great opportunity for Emerson as we advance the journey to autonomous operations.”
— Surendralal Karsanbhai, Q2 FY2026
“Emerson recently deployed an AI-driven optimization solution for Aramco, one of the world's leading integrated energy and chemicals companies.”
— Surendralal Karsanbhai, Q2 FY2026
“Emerson's Aspen Hybrid Models were integrated into Aramco's existing refinery planning network to create one of the world's largest multisite optimization models and give Aramco a scalable, robust tool for global refinery planning.”
— Surendralal Karsanbhai, Q2 FY2026
“I mean I think a lot of customer interest, not only on Nigel on the NI side but certainly the capabilities we've launched on Ovation, DeltaV as well as AspenTech.”
— Ram Krishnan, Q2 FY2026
“I would say, frankly, we do believe that it is a differentiator for us and we are seeing a lot of activity, particularly in the Ovation business in terms of customer dialogue and a lot of quotes around AI.”
— Ram Krishnan, Q2 FY2026
“I would say it's a little early for it to translate into meaningful revenue opportunities.”
— Ram Krishnan, Q2 FY2026
“But I think as we progress into 2027 and beyond, I think it will be a huge differentiator for us.”
— Ram Krishnan, Q2 FY2026
“In January, our Nigel AI advisor was one of 13 products recognized as a 2025 product of the year by electronic product design and test.”
— Surendralal Karsanbhai, Q1 FY2026
“Nigel provides intelligent workflows with AI-driven test design and orchestration to accelerate troubleshooting, optimize lab performance, and enhance decision-making.”
— Surendralal Karsanbhai, Q1 FY2026
“This award demonstrates Emerson Electric Co.'s leadership in AI-enabled test automation and reflects continued momentum as we move the industry towards autonomous test operations.”
— Surendralal Karsanbhai, Q1 FY2026
“These upgrades deliver step-changing performance by moving Nigel.ai from an AI assistant to an AI author, accelerating code development to make engineering workflows more efficient from design and validation through production.”
— Surendralal Karsanbhai, Q1 FY2026
“Processes that previously took hours can now be completed in minutes.”
— Surendralal Karsanbhai, Q1 FY2026
“This evolution marks a clear step along our roadmap towards AgenTeq AI, software increasingly enhances productivity, and we are seeing accelerated user adoption of LabVIEW since the first launch of Nigel in 2025.”
— Surendralal Karsanbhai, Q1 FY2026
“DeltaV version 16 empowers customers to make smarter decisions by improving access and providing context to operational data to facilitate advanced analytics and AI optimization.”
— Surendralal Karsanbhai, Q1 FY2026
“AI and digital transformation of manufacturing are leading customers to deploy significant capital towards greenfield and modernization projects for power generation, especially in The U.S.”
— Surendralal Karsanbhai, Q1 FY2026
“First, Emerson Electric Co. was chosen to automate on-site power generation for a new 1.7 gigawatt AI data center in The United States, helping to meet accelerated deployment timelines and mission-critical reliability.”
— Surendralal Karsanbhai, Q1 FY2026
“So the threat of AI disrupting our software business is very minimal as we see it today.”
— Ram Krishnan, Q1 FY2026
“And really as a counterpoint, AI capability we're building into our software should frankly accelerate the growth.”
— Ram Krishnan, Q1 FY2026
“So we see AI and all the AI capabilities we launched, not just with Nigel, but also the capabilities, innovation and DeltaV should be a net accelerator for software offerings, and that's really what we expect to see with continued ACV growth.”
— Ram Krishnan, Q1 FY2026
ANALYST QUESTIONS ON AI
Q (Q2 FY2026, Andrew Buscaglia): So obviously, very topical throughout the quarter and throughout the year this year has been on AI -- has been on software. And it sounds like you guys kind of -- you have these new products out, Nigel, you talked about quite a bit. It sounds like adoption is going well. But can you give us an update on anything you've learned intra-quarter on that front? And then I'm curious on the outlook, like how impactful do you see these products contributing to growth going forward as soon as this year?
A: I would say, frankly, we do believe that it is a differentiator for us and we are seeing a lot of activity, particularly in the Ovation business in terms of customer dialogue and a lot of quotes around AI. I would say it's a little early for it to translate into meaningful revenue opportunities.
Q (Q1 FY2026, Andrew Kaplowitz): As you know, there's angst regarding AI's on software. So I think you already spoke about Nigel.ai. I know you've talked about the greater vision of balanced automation. So maybe you can remind us why AI could be complementary to growth for you guys in ACV and margin in your your software businesses?
A: So the threat of AI disrupting our software business is very minimal as we see it today. And really as a counterpoint, AI capability we're building into our software should frankly accelerate the growth.