We're buying the post-earnings dip in an AI industrial stock with a bright future

We are buying 25 shares of Eaton at roughly $398 each. Following Tuesday's trade, Jim Cramer's Charitable Trust will own 250 shares of ETN, increasing its weight in the portfolio to 2.63% from 2.38%.

We are picking up more shares of Eaton as the stock falls less than 6% after reporting first quarter earnings. The electrical equipment company posted better than expected numbers, beating Street estimates on both net sales and adjusted earnings per share (EPS). However, the stock dropped in early trading because management only raised its full-year adjusted EPS outlook by a small amount. Also, the midpoint of its second quarter earnings outlook was below the Street consensus estimate too.

Investors in the AI infrastructure theme want to see bigger beats and raises to justify the year to date stock moves and high price-to-earnings multiples. In this snapshot of time, Eaton didn't deliver.

We are buyers of this weakness because we have a longer-term view. If you look at Eaton's order book – which tells you where revenue and earnings are going in the future – there's a great story here. ETN YTD mountain Eaton YTD Organic orders accelerated in Electrical America's to 42% year over year, with data center orders up 240%. Elsewhere, Electrical Global and Aerospace orders increased 13% year over year. Eaton's an order story, and we think investors should focus more on the strength here over near term margin concerns.

Also, the Boyd Thermal acquisition appears to be off to a terrific start with revenue increasing more than 100% year over year in the first quarter. This deal closed last March.

Finally, we are fans of industrial breakups, and we were pleased to see the company reiterate its spinoff of the Mobility business is on track for the first quarter of 2027.

Putting it all together, expectations were high into the Eaton print given its outperformance year to date, and we don't think this quarter derails that story. With shares down more than 6% in early trading, we are scooping up shares and upgrading our rating to a buy-equivalent 1 .

(Jim Cramer's Charitable Trust is long ETN. See here for a full list of the stocks.)

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