The Zacks Building Products - Air Conditioner & Heating industry is set for continued growth as demand strengthens for energy-efficient systems, advanced climate-control technologies, and data-center-focused solutions. Sustainability goals and policy incentives are accelerating investment in digitalization, retrofits, and next-generation equipment. Players like Comfort Systems USA (FIX Quick QuoteFIX - Free Report) and SPX Technologies (SPXC Quick QuoteSPXC - Free Report) are capitalizing on these trends by expanding through acquisitions, upgrading digital capabilities, and building service-driven models aligned with fast-growing segments such as data center cooling.

Residential activity remains supportive as homeowners prioritize comfort, efficiency, and indoor air quality. At the same time, commercial and industrial demand is climbing, fueled by data centers, high-tech facilities, and green infrastructure needs. Industry participants are strengthening recurring revenue through services and targeted deals, helping buffer macro uncertainties. Although housing softness, interest rates, tariffs, and geopolitical pressures pose near-term risks, the industry’s innovation momentum, focus on sustainability, and policy tailwinds reinforce a strong long-term outlook.

Industry Description

The Zacks Building Products - Air Conditioner & Heating industry comprises designers, manufacturers, and marketers of a broad range of products for heating, ventilation, air conditioning, and refrigeration markets. The products include rooftop units, chillers, air-handling units, condensing units and coils. The industry players also supply thermostats, insulation materials, refrigerants, grills, registers, sheet metal, tools, concrete pads, tape and adhesives. Air conditioning and heating equipment are sold in residential replacement, commercial and industrial HVAC (heating, ventilation and air conditioning), as well as residential new construction markets.

5 Trends Shaping the Future of the Air Conditioner & Heating Industry

Data Centers & Specialized Cooling Needs: The data center boom, driven by AI, cloud computing, and high-performance computing, is fueling demand for specialized HVAC solutions. Cooling systems for these facilities must deliver precise, reliable performance, which has spurred investment in advanced technologies like liquid cooling and modular units. This segment is becoming a major growth driver for HVAC companies, offering high-margin opportunities and attracting M&A activity. HVAC firms with capabilities in precision cooling and energy-efficient infrastructure are well-positioned to capture share in this fast-expanding niche.

Meanwhile, technology upgrades and strategic acquisitions are driving growth across the industry. Companies are enhancing customer experience through digital platforms and investing in R&D, distribution, and marketing. Acquisitions are expanding product lines and geographic reach. Meanwhile, service-related revenues—such as maintenance and repair—offer steady income, cushioning against construction market volatility.

U.S. Administration’s Pro-Environmental Moves: One of the key priorities of the U.S. administration has been cutting greenhouse gas emissions to promote a cleaner environment. Many industry participants remain engaged in supporting industries and facilities by selling and maintaining clean and efficient energy systems to reach their environmental goals for carbon reduction while providing resiliency to grid outages. Aging equipment and higher efficiency standards are prompting homeowners to upgrade to high-SEER air conditioners, advanced heat pumps, and smart thermostats that cut energy use while meeting stricter emissions rules. Federal and state incentives and rebates are further accelerating this trend by offsetting the cost of high-efficiency units. The commercial HVAC market has been experiencing a rebound and transformation, thereby driving fresh HVAC needs. Overall, the HVAC replacement activity remains resilient.

Technology Augmentation & Inorganic Moves: Persistent investments in technologies designed to revolutionize customer experience seem vital for the industry. Digitization of the companies’ marketplace via e-commerce and iOS/Android-enabled apps, supported by a comprehensive database of product information, continues to see strong momentum. Importantly, new investments in the expansion of distribution, research and development projects, and marketing programs are contributing significantly to the companies’ top lines. The players are also actively pursuing accretive acquisitions to broaden their product portfolios and expand their geographic footprints, as well as market share. Meanwhile, services associated with maintaining, monitoring and repairing the existing equipment are providing industry participants with stable revenue sources. The industry generates a major share of revenues from these services, which consumers generally cannot suspend, even when the construction market fluctuates.

Housing Market Volatility, Macroeconomic Uncertainty, Tariff and Trade Policy Risks: The broader housing and remodeling market remains uncertain. Higher interest rates, economic fluctuations, and shifts in consumer spending patterns can impact renovation and construction activity. 

Global players face headwinds from economic and political volatility, with China’s slowdown and weaker Asian demand posing growth risks. In Europe, policy shifts on heat pumps add uncertainty, while China’s property slump and soft HVAC demand further challenge the residential segment.

Many industry players are exposed to potential disruptions from changing trade policies. Managing supply chain efficiency while ensuring cost competitiveness in the face of potential tariff increases remains a critical challenge. The inflationary impact of proposed U.S. tariffs, especially on refrigerants like R-32, most of which are sourced from China, is also a cause of concern. This may trigger price hikes by OEMs, further contributing to channel volatility.

Labor Shortages, Supply Chain Constraints, Regulations: The U.S. HVAC industry has been grappling with labor shortages, ongoing supply chain bottlenecks and rising regulatory costs. Limited technician availability is pushing up wages and slowing project timelines, while material shortages and tariffs are driving equipment prices higher. Compliance with low-GWP refrigerant rules and tougher SEER2 standards is adding further manufacturing and training expenses. These pressures are tightening margins and complicating execution, while competition and seasonal demand swings add to overall risk.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Building Products - Air Conditioner & Heating industry is a seven-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #77, which places it in the top 32% of more than 250 Zacks industries. 

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates impressive near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Lags Sector & S&P 500

The Zacks Air Conditioner & Heating industry has underperformed the broader Zacks Construction sector and the Zacks S&P 500 Composite over the past year.

In the same time frame, the industry has lost 10.3% compared with the broader sector’s 6.6% decline. Meanwhile, the Zacks S&P 500 Composite has gained 15.2% during the period.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month price to earnings, which is a commonly used multiple for valuing Air Conditioner and Heating stocks, the industry is currently trading at 24.24X compared with the S&P 500’s 23.53X and the sector’s 19.44.

Over the past five years, the industry has traded as high as 30.37X, as low as 15.87X and at a median of 23.74X, as the chart below shows.

Industry’s P/E Ratio (Forward 12-Month) Versus S&P 500

Industry’s P/E Ratio (Forward 12-Month) Versus Sector

2 Air Conditioner and Heating Stocks to Buy Now

Below, we have discussed two stocks from the Zacks Air Conditioner & Heating universe with solid growth potential.

Comfort Systems: Based in Houston, TX, the company is a national provider of comprehensive heating, ventilation and air conditioning installation, along with maintenance, repair and replacement services. The company has been benefiting from a combination of strong backlog visibility, sector diversification, and execution strength. Also, rising demand in technology-driven projects, particularly data centers, which provide attractive margins and long-term revenue streams, is a major tailwind. Its modular construction capabilities add speed, flexibility, and efficiency, strengthening its competitive edge in complex projects across technology, pharmaceutical, and industrial end-markets. Beyond construction, the service segment has become a reliable contributor of steady cash flow, balancing out the lumpier nature of large-scale builds. Broad exposure to industrial, institutional, and healthcare customers further diversifies revenue sources and reduces risk concentration.Margin expansion has been supported by disciplined project selection, operational efficiency, and pricing power, while a strong balance sheet enables continued reinvestment, acquisitions, and shareholder returns. Importantly, Comfort Systems’ ability to attract and retain skilled craft professionals ensures execution capacity, positioning it well for sustained growth.

Comfort Systems currently sports a Zacks Rank #1 (Strong Buy). The stock has gained 102.2% over the past year. FIX has seen an upward estimate revision for 2025 and 2026 earnings per share (EPS) to $26.31 (from $23.00) and $30.61 (from $25.27) over the past 60 days, respectively, depicting analysts’ optimism over the company’s prospects. The estimated figure indicates 80.2% and 16.4% year-over-year growth in 2025 and 2026, respectively. Comfort Systems surpassed earnings estimates in all the trailing four quarters, with the average surprise being 30.4%. Again, Comfort Systems’ trailing 12-month return on equity of 43.6% is better than its peer group average of 17.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: FIX

SPX Technologies: Headquartered in Charlotte, NC, SPX Technologies supplies infrastructure equipment for global HVAC and detection and measurement markets. SPX Technologies has been benefiting from strong organic momentum across HVAC and Detection & Measurement, aided by rising demand in data centers, healthcare and institutional markets. The company is gaining from robust backlog levels and meaningful operating leverage as volumes increase. Capacity expansion—such as new U.S. production for TAMCO dampers and planned Ingeniafacilities—positions SPXC to capture excess demand and accelerate revenue conversion. New products like Olympus Max, receiving solid customer engagement, open incremental data-center cooling opportunities. Recent acquisitions, including KTS and Sigma & Omega, are contributing materially to revenue and margin expansion. Additionally, enhanced liquidity from a sizeable equity raise provides flexibility to pursue further organic and inorganic growth initiatives.

SPX Technologies currently carries a Zacks Rank #2 (Buy). The stock has surged 30.6% over the past year. SPXC has seen an upward estimate revision for 2025 and 2026 EPS to $6.74 (from $6.53) and $7.57 (from $7.30) over the past 60 days, respectively. The estimated figure indicates 20.8% and 12.3% year-over-year growth in 2025 and 2026, respectively. SPXC surpassed earnings estimates in all the trailing four quarters, with the average surprise being 12.1%. Again, SPXC’s trailing 12-month return on equity is 18.7%.

Price and Consensus: SPXC