Carrier, Trane and Johnson Controls are up 25-30% this year — and Citi analysts say there's more room to run
Carrier, Trane and Johnson Controls are up 25-30% this year — and Citi analysts say there's more room to run.
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Extreme heat has swept through Europe and much of the United States in recent weeks. Investors are responding by snapping up shares in air conditioning companies and other climate-related stocks.
Since late May, Europe has been hit (1) by a string of heat waves that set record temperatures in the United Kingdom and Germany. France also dealt with triple-digit temperatures that forced the French government to temporarily shut down (2) nuclear reactors.
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Even before triple-digit temperatures reached Europe and the U.S. more recently, air conditioning and ventilation were viewed as companies ripe for growth given the AI boom's demand for industrial cooling systems. Traditional air-conditioning units do not suffice (3) for data centers since the AI hardware generates enormous heat and advanced liquid cooling is necessary to remove it.
Analysts say that the scorching heat presents a new opportunity for expanded use of air-conditioning — particularly in Europe — since A/C isn't common in many European nations. Only 25% of French homes have an A/C unit, while the proportion doubles to 50% for Spanish and Italian homes, according to the BBC. (4)
"Relatively low penetration of air conditioning in Europe coupled with seemingly more frequent and hotter heat waves we think could be [supporting] growing AC use in the region," Citibank analysts wrote in a June 26 client note provided to Moneywise.
By comparison, over 90% of U.S. homes are equipped with an A/C unit, per the BBC.
Climate researchers said last year (5) that Europe is warming at twice the global average, the fastest rate of any continent. Scientists have warned that extreme weather events are likelier as a result, which could include more frequent heat waves.
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There's a "tailwind" forming for U.S.-based HVAC companies, according to Citi.
For New York-listed Carrier Global, stock prices have reached $70 per share since the start of the year, or a 30% increase. Citi analysts projected it could reach $79 per share.
Carrier CEO David Gitlin reaffirmed (6) company expectations of double-digit growth for its global commercial HVAC — heating, ventilation, and air conditioning — business this year following the end of the first quarter.
Stock prices for HVAC manufacturer Trane are also up by roughly 27% to $485 per share since the beginning of 2026. Investors are similarly flocking to the New York-listed Trane since it's well-positioned to supply the commercial cooling equipment critical to the AI frenzy. Citi analysts are projecting this stock has even more room to grow to a $570 target price due to the increased focus on energy efficiency.
Citi also singled out Johnson Controls International, another HVAC manufacturer. Its stock price currently stands at $143 per share, a 25% jump from the start of the year. Citi analysts believe it could reach a $155 target price.
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