Xylem (XYL) shares surged 5% intraday on Tuesday, building on strong pre-market momentum after the water-management company reported second-quarter results that beat Wall Street estimates and raised its full-year profit outlook.

The company posted adjusted earnings of $1.46 per share, comfortably exceeding the analyst consensus of $1.34. Revenue rose 2% to $2.34 billion, matching expectations. Looking ahead, Xylem lifted its 2026 adjusted EPS guidance to a range of $5.55 to $5.70, up from the prior $5.35 to $5.60 and above the FactSet estimate of $5.55. CEO Matthew Pine highlighted strengthening demand drivers, specifically noting that the expansion of AI infrastructure is increasing the need for water solutions across semiconductor manufacturing, power generation, and mining.

The upbeat results and bullish commentary on AI-related water demand appear to be the primary catalysts for the stock’s sharp intraday rally.