Xylem stays a 'Buy' with 20% upside, driven by AI data center and digital water tech growth.

Xylem remains a strong buy as it leverages growth in AI data centers and digital water management, despite a slight revenue miss. The company raised its 2026 EPS guidance and is expanding margins through portfolio optimization and high-margin digital offerings. Shares trade at a 15% discount to fair value, offering about 20% upside potential over the next year. With a solid balance sheet and a 14-year dividend growth streak, Xylem is well-positioned for continued dividend increases and long-term returns.