Xylem's AI water demand and profit raise offset by slower core growth
AI data center water demand accelerates Xylem raised its 2026 profit forecast to $5.55–$5.70 per share, citing AI-driven water needs in semiconductors, power, and mining. Data center revenue is expected to jump about 200% in 2026, though it will still be only ~2% of total sales. This growing niche supports future earnings.
This is the main new positive force behind XYL's profit outlook and investor interest.
Core organic growth guidance narrowed to 2–3% Xylem cut its full-year organic revenue growth outlook to 2–3% because of delays in electric metering projects. China sales fell 27% as the company walked away from low-quality business. This slower core growth is a real drag on the stock, even as profits rise.
It explains the main counterweight to the positive AI story and why the stock has lagged.
New partnerships expand water reuse and treatment Xylem partnered with Moleaer to deploy chemical-free nanobubble treatment for U.S. lakes, and expanded its Dow partnership to build and operate advanced water reuse systems in Alberta. These deals add long-term demand for Xylem's equipment and services.
These are fresh contracts that show Xylem winning new business and expanding its addressable market.
Data center water treatment market projected to grow 12.3% annually A new report projects the global data center water treatment equipment market will grow from $3.3 billion in 2026 to $5.9 billion by 2031. Xylem is named a leading player. This market growth gives Xylem a long runway for sales as data centers multiply.
It provides independent market data confirming the AI water demand trend that supports XYL's growth story.