What's going on?

After reporting better than expected profits in its most recent quarter and saying it would earn more than it had forecasted for 2017, Siemens, the German industrial conglomerate, saw its stock jump 5% on Wednesday � reaching its highest level since 2001!

What does this mean?

Strength in digital services and in its renewable energy division, where profits more than doubled, contributed to Siemens� solid results. It�s a sign that Siemens� strategic plan (known as Vision 2020) is paying off nicely. The plan, announced in 2014, includes exiting some old businesses (like healthcare) and making its remaining businesses much more digital, e.g. by utilizing more sophisticated data strategies.

Why should I care?

For the stock: Siemens� share price has improved dramatically.

It�s risen by 40% over the past year � markets clearly think that the company�s new strategy is on the right track. Its outlook is not without risk, however. For one, political uncertainty in both Europe and the US is a concern: businesses, which are Siemens� clients, tend to hold back from investing in equipment when the political outlook is unclear, as it is in Europe (although, interestingly, business confidence appears to be increasing despite the risks). Also, as a multinational company, Siemens is at risk if global trade policies were to become more restrictive (e.g. under President Trump).

The bigger picture: Old-school industrial companies are re-inventing themselves to prosper in the 21st century.

To help transform itself into a more agile company, Siemens has acquired a handful of tech companies, whose digital services it will incorporate into its client offering (e.g. software for its automotive products). It�s not the only company thinking this way: General Electric, another big industrial conglomerate and rival to Siemens, has also been on a buying spree for tech startups as of late. Investors have rewarded both companies as they become much more tech-savvy.