The Zacks Building Products - Air Conditioner & Heating industry continues to benefit from several favorable trends in 2026. Rapid data center development is driving demand for specialized and energy-efficient cooling systems, while electrification and tighter efficiency standards are supporting heat pumps and other advanced HVAC solutions. Rising adoption of smart controls and connected systems, along with steady service and aftermarket demand, provides further support.

On the downside, weakness in single-family construction and cautious consumer spending continue to limit residential HVAC demand, increasing dependence on replacement activity. Tariffs, commodity and freight inflation also create cost pressures, while investments in new manufacturing capacity can weigh on margins through start-up costs and lower initial utilization. Despite these challenges, companies such as Comfort Systems USA (FIX Quick QuoteFIX - Free Report) , Carrier Global Corporation (CARR Quick QuoteCARR - Free Report) and SPX Technologies, Inc. (SPXC Quick QuoteSPXC - 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.

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 Center Boom Fuels Commercial HVAC Demand: Rapid investment in AI, cloud computing and hyperscale data centers is emerging as a major growth driver for the U.S. Air Conditioner and Heating industry. These facilities require large, reliable and energy-efficient cooling systems to manage increasingly dense computing workloads. Demand is expanding across air- and water-cooled chillers, custom air handlers, cooling towers, dry and adiabatic cooling systems and related equipment. Strong project pipelines are also encouraging manufacturers to expand production capacity and improve throughput. Importantly, hyperscale and colocation projects generally provide greater forward visibility because cooling equipment must be secured well before facilities become operational, supporting a favorable multiyear demand outlook. 

Electrification, Efficiency Upgrades and Smart HVAC Drive Growth: Electrification, tighter efficiency standards and smart-building adoption are supporting U.S. HVAC industry growth in 2026. Demand for electric heat pumps, high-SEER air conditioners and low-GWP refrigerant systems is rising as customers seek lower energy use and compliance with stricter regulations. Federal and state incentives are helping offset upgrade costs, while aging equipment supports resilient replacement demand.

Meanwhile, HVAC systems are becoming more connected through intelligent controls, smart thermostats, humidification systems and actuated valves, improving efficiency, performance and operational visibility. This shift toward higher-value, connected equipment is also expanding service and aftermarket opportunities across residential and commercial markets.

Housing Weakness Limits Residential HVAC Recovery: Residential HVAC demand remains under pressure from persistent weakness in the U.S. housing market. New single-family construction continues to face challenges, while cautious consumer spending is restraining discretionary repair and remodeling activity. A meaningful recovery in residential construction is not expected in 2026, limiting demand for HVAC systems tied to new homes. Although earlier channel destocking is fading, underlying demand remains subdued and increasingly reliant on replacement activity rather than new installations. These conditions could keep residential HVAC volumes under pressure and make the segment more vulnerable to housing affordability constraints, elevated borrowing costs and continued consumer caution.

Tariffs, Inflation and Capacity Costs Pressure Margins: Cost pressures remain a key challenge for the U.S. Air Conditioner and Heating industry in 2026. Tariffs are raising costs for certain materials and components, while commodity, freight and other inflationary pressures add uncertainty to the price-cost equation. Pricing actions can offset some of these pressures, but tariff-related price increases do not necessarily translate into higher margins.

At the same time, manufacturers are rapidly expanding capacity to meet strong commercial and data center demand. New facilities and production lines can initially generate start-up costs, lower utilization and operating inefficiencies. Higher utilization, sourcing improvements and productivity gains will therefore be important for margin improvement.

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 #32, 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 June 2026, the industry’s earnings estimates for 2026 and 2027 have increased to $5.11 per share (from $4.91) and $5.95 per share (from $5.70), respectively.

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, Lags S&P 500

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

In the same time frame, the industry has gained 16.7% compared with the broader sector’s 6.5% rise. Meanwhile, the Zacks S&P 500 Composite has gained 23.4% 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 23.87X compared with the S&P 500’s 20.55X and the sector’s 19.99X.

Over the past five years, the industry has traded as high as 30.77X, as low as 15.87X and at a median of 23.97X, 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

3 Air Conditioner and Heating Stocks to Buy Now

Below, we have discussed three 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 is benefiting from strong demand across technology and other industrial markets, supported by continued data center construction and rising needs for complex mechanical and electrical infrastructure. Direct relationships with hyperscalers provide visibility into future projects, while sustained customer demand supports further expansion of its modular operations.  The company is also broadening its modular customer base through opportunities with frontier labs and colocation providers.  Strong institutional demand, disciplined project selection and skilled tradespeople further support execution. Meanwhile, the growing installed base of data centers creates a longer-term opportunity to expand recurring service and maintenance work.
 
Comfort Systems currently carries a Zacks Rank #1 (Strong Buy). The stock has gained 142.6% over the past year. FIX has seen an upward estimate revision for 2026 earnings per share (EPS) to $45.86 from $43.05 over the past 30 days. The estimated figure indicates 58.8% year-over-year growth in 2026. Comfort Systems surpassed earnings estimates in all the trailing four quarters, with the average surprise being 34.6%. Again, Comfort Systems’ trailing 12-month return on equity of 53.6% is better than its peer group average of 16.9%. It has a VGM Score of B. 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 is benefiting from robust demand for data center cooling solutions, supported by hyperscaler, colocation and neocloud customers. Capacity expansions, improved production flow, lean initiatives and higher throughput are strengthening its ability to meet this demand.  The Neptronic acquisition adds another growth avenue by broadening SPX’s HVAC portfolio with intelligent controls, electric heating, humidification and actuated valves, while expanding its addressable markets.  Strong customer relationships and global distribution channels provide cross-selling opportunities. Meanwhile, healthy project activity, innovation and synergy initiatives in Detection & Measurement, along with an active acquisition pipeline, should support further growth.

SPX Technologies currently carries a Zacks Rank #2. The stock has gained 7.4% over the past year. SPXC has seen an upward estimate revision for 2026 EPS to $8.41 from $8.06 over the past 30 days. The estimated figure indicates 24.4% year-over-year growth in 2026. SPXC surpassed earnings estimates in all the trailing four quarters, with the average surprise being 8.6%. Again, SPXC’s trailing 12-month return on equity is 16.5%.

Price and Consensus: SPXC

Carrier: Headquartered in Palm Beach Gardens, FL, Carrier provides intelligent climate and energy solutions worldwide. Carrier has been benefiting from robust commercial HVAC demand, particularly from data centers, supported by growing hyperscaler and colocation investments and capacity expansion. Growing adoption of liquid cooling provides another opportunity as AI infrastructure becomes more power intensive. The recovery in residential and light commercial HVAC, supported by replacement demand and improving channel conditions, adds momentum. In Europe, heat-pump adoption, supportive subsidies, high natural-gas prices and new product launches remain favorable. Carrier is also benefiting from expanding aftermarket opportunities, while the 75F acquisition strengthens its intelligent-building, AI-enabled controls and systems-integration capabilities, broadening its addressable markets.

Carrier currently carries a Zacks Rank #2 (Buy). The stock has lost 11.2% over the past year. Carrier has seen an upward estimate revision for 2026 EPS to $2.85 from $2.79 over the past 30 days. The estimated figure indicates 10% year-over-year growth in 2026. Carrier surpassed earnings estimates in three of the trailing four quarters and missed on the other, with the average surprise being 8.5%.

Price and Consensus: CARR