So, a really exciting piece of this leg that we talk about these megatrends, one of which is digitalization, we see that in the data center market. And we also see that in the way we are bringing new products and new solutions to market as well across the company.
Steve Volkmann: Great. I look forward to that. Thanks.
Operator: Thank you. And the next question is from Nigel Coe from Wolfe Research. Please go ahead.
Nigel Coe: Hey. Good afternoon and thanks for keeping that’s going here. Slide 19 is good, obviously, very helpful. Just want to clarify a couple of things. So, data center, the 16% CAGR you are forecasting through ‘25 now, that’s for the market, so not necessarily Eaton, right? So, I know you have got some market share growth ambitions there. So, I just want to make that clear. And then when you talk about data center, are we talking here about the whole market? So obviously, a big chunk of that market is on-prem enterprise data centers, or are we talking about a subset of that market? So, just maybe just clarify that. And then within this end market matrix, I am pretty sure that if you put this up three months ago, you might have had a bit more of an optimistic view on residential.
Obviously, with the higher rates, etcetera, I understand why you are cautious there. And I know it’s not a big end market, but I am actually wondering if you are starting to see deterioration real time in that market or whether it’s much more sort of macro-driven?
Craig Arnold: Okay. So, I think there is three different questions there, but let’s take the first one around. So, the answer to the question is, yes, it is the entire market. So, that 16% growth rate is reflective of what’s happening in hyperscale, on-prem, colo. So, it is our view of the entire market. And yes, we would expect our businesses to grow faster than market and as a result of that do better than what we think the underlying market is doing. To the point around residential, yes, we have seen the slowdown in residential really around the world. And we have seen it in the U.S. and what happened in single-family first, though single family, quite frankly, had a little bit of a stronger Q4. Single-family starts were actually up some 6% in Q3.
Multifamily wallet kind of record levels of units that are under construction clearly saw a slowdown in Q3. But we are definitely seeing the slowdown in residential. You see it most acutely, quite frankly, in Europe. Many of you see the market data coming out of Germany and France where residential housing starts are down quite significantly, and everybody has read about what’s going on in China as well. But to your point, residential as a company is not the biggest piece of our market. And I think the other thing I would add to that is that one of the things we have talked about in prior meetings is that we are seeing higher electrical content in all of the new homes that are built as they meet the latest requirements for UL standards in the U.S. or other standards, IEC standards around Europe or we see smart homes being built, and they are putting in more smart solutions.
And so offsetting somewhat of that decline in units is the fact that we are seeing higher electrical content in new homes. And new homes are accounting for, quite frankly, a much higher percentage of the new housing market in general as people hold on to their legacy homes. And so yes, no question, residential has weakened up. We are seeing it in our business. But once again, the strength that we are seeing in the other end markets, big enough to offset those declines in residential.
Tom Okray: Yes. Just to add [ph] a little bit, Nigel, on that one. If you look at year-to-date and no question slowing down, but year-to-date for our overall electrical sector, we are actually positive from a residential perspective.
Craig Arnold: And I think it’s more a function of electrical content being higher, prices being better, the unit volumes would be down definitely as they would for others.
Nigel Coe: Yes, I know there are there parts to that question. But if I can just sneak one more in, I know we are running light. The eMobility 2025 target of 1.5 is a big step-up from the prior 1.2. Does that uplift and that’s sort of like that growth ramp from here to 1.5, does that come to support in ‘25, or do you expect it to be a bit more linear through the next couple of years? And does that – is there any implications for margins, I think you have got 11% margin for 2025, how do we think about that? That’s two questions.
Craig Arnold: Yes. I think that you would expect as you are well aware, and I don’t know this market works in vehicles that when they launch a platform, you will see a big change in the revenue as a function of when these new platforms launch. And so I would say that the volume does tend to be kind of chunky in the space as opposed to being linear. And once the vehicle launches and it’s in the market, then you will see kind of a linear pattern of growth. But once the program first launches, you will see more of a step function change in revenue. And so between now and 2025, that business will grow. And we talked about in some of the outlook numbers that we still expect our eMobility segment to see strong growth. It’s a very strong growth for 2024 in our guidance, but some of this growth will be chunky as we think about bringing on these new platforms that we have won.
Nigel Coe: That’s great.
Operator: Thank you. And our next question is from the line of Phil Buller from Berenberg. Please go ahead.
Phil Buller: Hi there. Thanks for the questions. Craig, just to follow-up on some of the answers you gave to the prior questions. You talked about the megatrends existing globally, which I get, but how much of the divergence between the U.S. and elsewhere would you attribute to the current economic differences, which I think is the answer you gave to Jeff’s earlier question versus how much of this is just the weighting towards data center and utilities in the U.S. being much larger than Europe, which I think is how we answered Julian’s question? I guess I am wondering if there is a third part to this, which is market share. So, I don’t know if you can comment on the market share changes that you see in the U.S. or Europe, please? Thanks.
Craig Arnold: Yes. No. What I would tell you is that in simple terms, I would say no with respect to market share. When you take a look at our growth in our European business in any given quarter, you could find things bouncing around. But if you look at our growth on a 2-year stack or 3-year stack and you look at our revenues versus our peers, I think you would find the numbers to be quite comparable. But I would say that it is mega projects and the scale of mega projects that is driving the differences. It is where we play in, let’s say, the Americas versus where we play in Europe. I talked about our penetration in Europe being a lot of which is in MOEM and industrial equipment. We don’t have today as broad a portfolio in some of these other segments, call it, data center.
We played very well in data centers, but we are not as big a player in data centers. We play in utilities, but we are not as big a player in the utility market. So, we just have a broader, more complete set of solutions in the Americas that are supported by these megatrends. And the other big difference is, once again, all the stimulus dollars that are being pumped into the U.S. economy that is essentially driving outside growth. And it’s driving outside growth in these same verticals, reindustrialization of industrial facilities, investments in utility markets, investments in chips and the Chip Act. And so you are finding these kind of broader trends being also turbocharged by government stimulus spending.
