The Zacks Building Products - Air Conditioner & Heating industry remains supported by strong secular growth drivers, including data-center-focused cooling solutions, rising demand for energy-efficient HVAC systems and advanced climate-control technologies. Sustainability initiatives, electrification trends and policy incentives continue to encourage investments in retrofits and smart building solutions. Companies such as Comfort Systems USA (FIX Quick QuoteFIX - Free Report) , AAON, Inc. (AAON Quick QuoteAAON - Free Report) , SPX Technologies (SPXC Quick QuoteSPXC - Free Report) and Tecogen Inc. (TGEN Quick QuoteTGEN - Free Report) are also expanding their opportunities through acquisitions, digital capabilities and service-oriented business models, while growing demand for indoor air quality and mission-critical cooling supports recurring revenue streams.

At the same time, the industry faces near-term headwinds from housing market softness, elevated interest rates and tariff-related cost pressures. These factors may affect residential construction activity, project timelines and customer spending decisions, creating some demand volatility. Nevertheless, expanding data center investments, green infrastructure development and the ongoing replacement cycle for aging HVAC systems are expected to drive sustained demand. Strong exposure to commercial, industrial and service markets positions the industry to benefit from durable growth opportunities in the years ahead.

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.

4 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. Also, electrification remains one of the most powerful structural tailwinds for the industry in 2026. Heat pumps continue to gain share versus traditional gas furnaces as performance in colder climates improves and total lifecycle economics become more attractive.

Regulatory-Driven Efficiency Upgrades and Premiumization: Stricter efficiency standards and the transition to low-global-warming-potential refrigerants are driving a new upgrade cycle.  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.

Housing Market Volatility, 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. 

Proposed and evolving U.S. tariff policies have emerged as a growing concern for the air conditioning and heating industry, particularly for refrigerants and imported HVAC components. One area of concern is refrigerants such as R-32, which have become increasingly important following the industry's transition to lower-global-warming-potential refrigerants. Additional tariffs on refrigerants or related supply-chain inputs could raise equipment and servicing costs, potentially leading to higher prices for contractors and end users. While manufacturers are implementing pricing actions and supply-chain adjustments to offset these impacts, the industry expects tariff-related cost pressures to remain a headwind throughout 2026.

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 nine-stock group within the broader Zacks Construction sector. The industry currently carries a Zacks Industry Rank #31, which places it in the top 13% 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 optimistic 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.

The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a higher earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential. Since March 2026, the industry’s earnings estimates for 2026 have increased to $4.90 per share (from $4.67).

We highlight a few stocks that investors may consider adding to their portfolios. First, we examine the industry’s shareholder returns and current valuation backdrop.

Industry Outperforms Sector & S&P 500

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

In the same time frame, the industry has gained 34.6% compared with the broader sector’s 20.4% rise. Meanwhile, the Zacks S&P 500 Composite has gained 31.7% 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 29.14X compared with the S&P 500’s 22.17X and the sector’s 21.53.

Over the past five years, the industry has traded as high as 30.37X, as low as 15.87X and at a median of 24.02X, 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

4 Air Conditioner and Heating Stocks to Buy Now

Below, we have discussed four 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. Comfort Systems has been benefiting from robust demand across data centers, semiconductor manufacturing, life sciences, healthcare, and advanced manufacturing projects. The company continues to benefit from AI-driven digital infrastructure investments, with technology projects remaining its largest source of pipeline activity and backlog. Onshoring trends are creating additional opportunities in industrial construction, while expanding modular construction capabilities improve efficiency, productivity and project execution. A broad national footprint, skilled workforce and growing service operations further strengthen its competitive position. The company is also investing in capacity expansion and pursuing disciplined acquisitions, which should support sustained growth and reinforce its leadership in large-scale mechanical and electrical contracting markets.

Comfort Systems currently carries a Zacks Rank #1 (Strong Buy). The stock has gained 270.6% over the past year. FIX has seen an upward estimate revision for 2026 earnings per share (EPS) to $43.05 from $42.74 over the past seven days. The estimated figure indicates 49.1% year-over-year growth in 2026. Comfort Systems surpassed earnings estimates in all the trailing four quarters, with the average surprise being 39.3%. Again, Comfort Systems’ trailing 12-month return on equity of 51.7% is better than its peer group average of 16.2%. You can see the complete list of today’s Zacks #1 Rank stocks here. .

Price and Consensus: FIX

AAON: Headquartered in Tulsa, OK, AAON designs, manufactures and sells commercial air conditioning, heating and ventilation equipment across the United States and Canada. The company is benefiting from strong demand across both its traditional HVAC and data-center cooling businesses. AAON continues to gain market share through its highly engineered, customizable solutions, while expanding production capacity across multiple facilities to meet rising customer demand. The data-center thermal management market remains a major growth catalyst, driving robust order activity and a growing backlog. AAON is also benefiting from increased adoption of its heat-pump offerings and improving demand in its transactional rooftop HVAC business. Management expects ongoing investments in manufacturing capacity, supply-chain capabilities and operational efficiency to support higher production throughput, stronger execution and long-term margin expansion, positioning the company for sustained growth.

AAON currently sports a Zacks Rank #1. The stock has surged 56.3% over the past year. AAON has seen an upward estimate revision for 2026 EPS to $2.23 from $2.00 over the past 30 days. The estimated figure indicates 65.2% year-over-year growth in 2026. AAON surpassed earnings estimates in two of the trailing four quarters and missed on the other two, with the average surprise being 6.2%. Again, AAON’s trailing 12-month return on equity is 13.7%.

Price and Consensus: AAON

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 demand across its HVAC and Detection & Measurement businesses. The company is benefiting from accelerating data center investments, which are driving demand for advanced cooling, air-handling and air-movement solutions. Ongoing capacity expansions are expected to enhance its ability to serve customers and support future growth. Beyond data centers, healthy demand from healthcare, pharmaceuticals, power, industrial and aftermarket markets provides additional momentum. SPX Technologies is also advancing innovative software and utility-location solutions that improve customer efficiency and safety. Furthermore, recent acquisitions, a robust acquisition pipeline and continued new product introductions position the company for sustained organic and inorganic growth in the coming years.

SPX Technologies currently carries a Zacks Rank #2 (Buy). The stock has surged 49.8% over the past year. SPXC has seen an upward estimate revision for 2026 EPS to $7.98 from $7.95 over the past 30 days. The estimated figure indicates 18.1% year-over-year growth in 2026. SPXC surpassed earnings estimates in all the trailing four quarters, with the average surprise being 9.7%. Again, SPXC’s trailing 12-month return on equity is 17%.

Price and Consensus: SPXC

Tecogen: Based in North Billerica, MA, Tecogen designs, manufactures and services cogeneration and clean energy systems for residential, commercial and industrial customers across the United States. Tecogen’s growth prospects are increasingly tied to rising demand for its dual-power-source chiller technology, which is gaining traction in both data center and non-data-center markets. The company is benefiting from growing concerns around power constraints, grid reliability and the need for uninterrupted cooling, making its hybrid cooling solutions more attractive. Management highlighted expanding engagement with major data center operators, ongoing product demonstrations and a strengthening relationship with Vertiv, which could support broader market adoption. Beyond data centers, demand from healthcare and commercial customers is accelerating as energy and infrastructure challenges intensify. Tecogen is also investing in manufacturing capacity, product development and operational efficiency to support future growth and scalability.

Tecogen currently carries a Zacks Rank #2. The stock has gained 28.2% over the past year. Loss per share estimate for TGEN’s 2026 bottom line has narrowed to 25 cents from 27 cents over the past 30 days. The estimated figure for 2026 indicates a year-over-year improvement from the year-ago loss of 26 cents per share.

Price and Consensus: TGEN