Rolls-Royce Sees 40% Profit Surge Driven by Growing Demand for AI Data Center Power

Rolls-Royce experienced a remarkable growth in profits, achieving a staggering increase of 40% last year. The engineering giant’s resurgence has been fueled primarily by the surging demand for power from data centers, a sector that has gained immense importance as technology progresses.

For the year 2025, Rolls-Royce reported underlying profits amounting to £3.5 billion, a significant rise from £2.5 billion the previous year. In conjunction with these impressive financials, the company announced a plan to return up to £9 billion to shareholders over the next three years. This move marks the largest payout to investors in a decade, underscoring the company’s commitment to generating shareholder value.

Tufan Erginbilgiç, the company’s chief executive since January 2023, has been instrumental in this turnaround. A former executive at BP, Erginbilgiç took the helm at a time when he described the company as being on a “burning platform.” His leadership has sparked a transformation that has led to profitability through strategic cost-cutting measures, renegotiation of unprofitable contracts, and the establishment of improved commercial terms with customers in the airline industry.

The outstanding results disclosed on Thursday were partly a response to an increase in demand for power from data centers. As major technology companies strive to build the necessary infrastructure to support advancements in artificial intelligence, the demand for generators has skyrocketed. Moreover, profits from Rolls-Royce’s power systems division—which specializes in manufacturing generators for these facilities—soared by 60%, reaching £852 million last year.

Nonetheless, the civil aerospace division remains the backbone of the company’s profitability. The division benefited from heightened demand for commercial jet engines and the additional revenue generated each time one of its engines is in operation. The company reported servicing a greater number of engines last year, coupled with better contract terms, which resulted in a notable 41% increase in profits for this segment, pushing it to £2.1 billion.

Rolls-Royce has also successfully navigated through challenges, such as the turbulence created by Donald Trump’s tariff policies in 2025. However, the company was ultimately exempted from tariffs on its engines that power Boeing’s 787 passenger aircraft as a result of a US-UK trade agreement finalized in May.

In discussing the company’s performance, Erginbilgiç stated, “Rolls-Royce’s turnaround continues with pace and intensity. We are consistently achieving outcomes that were not possible before our transformation.” This sentiment reflects the company’s revitalized outlook and commitment to driving future growth.

In light of their robust financial performance, Rolls-Royce has significantly upgraded its forecasts, now projecting an operating profit between £4.9 billion and £5.2 billion by 2028. This is approximately a third more than the previous estimate, illustrating the company’s optimistic future outlook and ongoing strategic improvements.

This year, Rolls-Royce plans to return £2.5 billion to shareholders, which is part of its long-term buyback strategy. Notably, the company only executed its first buyback in a decade last year, successfully returning £1 billion to investors.

In a significant milestone for the company, Rolls-Royce was selected to construct the UK’s first small nuclear reactors at Wylfa in North Wales, a project that is supported by £2.5 billion in government funding. The firm is optimistic that this venture will be profit-generating within five years, further solidifying its position in the energy sector.

On Thursday morning, Rolls-Royce’s shares surged nearly 7%, contributing to a record high for the FTSE 100, which reached 10,825 points—an increase of 18 points or 0.15%. This market confidence highlights the positive reception of the company’s financial results and future projections among investors.