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Is GTX Finding a New Edge in Industrial Cooling & Power?
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Key Takeaways
GTX is expanding into industrial cooling and power generation beyond its core turbocharger business.
Garrett's Trane deal brings its oil-free compressors to HVAC systems, with select units due in 2026.
Garrett sees industrial cooling topping 5% of revenue by decade-end, though ramp risks remain.
Garrett Motion (GTX - Free Report) is expanding beyond its traditional automotive turbocharger business into industrial cooling and power generation applications. With that, the company aims to diversify revenue streams, leverage existing high-speed turbomachinery technologies, and tap into fast-growing end markets such as data centers, HVAC systems, and distributed power generation.
Strategic Rationale for Diversification
The company’s diversification strategy is rooted in the changing dynamics of the automotive sector and the broader energy transition. While Garrett continues to grow its core turbocharger business across gasoline, diesel, and hybrid vehicles, management is increasingly focused on applying its engineering capabilities to non-automotive markets where similar technologies are valued. Garrett’s expertise in high-speed electric motors, oil-free bearings, turbomachinery, and power electronics provides a natural entry point into industrial applications.
Industrial cooling and power generation are particularly attractive because they are experiencing strong structural demand. The expansion of hyperscale data centers, the electrification of infrastructure, and the need for energy-efficient HVAC systems are driving increased demand for both cooling capacity and reliable power supply. These trends create a sizable opportunity for Garrett to deploy its technologies outside of vehicle applications.
In the broader supplier landscape, peers like BorgWarner (BWA - Free Report) and Modine Manufacturing (MOD - Free Report) illustrate how auto-focused component makers can widen their addressable markets by combining electrification with thermal-management and efficiency-oriented products.
A key pillar of Garrett’s diversification strategy is its entry into industrial HVAC cooling systems. The company has developed an oil-free, high-speed centrifugal refrigerant compressor designed for commercial cooling applications. These compressors are designed to improve energy efficiency and reduce total cost of ownership for operators. Testing indicates that the solution can deliver more than 10% real-world energy savings compared with existing technologies.
To accelerate commercialization, Garrett recently announced a strategic collaboration with Trane Technologies. Under this partnership, Garrett’s next-generation compressors will be integrated into Trane’s commercial HVAC systems, including rooftop units, modular chillers, and large-scale chillers used for data center cooling. Initial units are expected to reach select customers in 2026, with broader production ramping up from 2027.
The company also launched its broader E-Cooling compressor portfolio at the AHR HVAC industry show. The product range spans cooling capacities from roughly 25 kilowatts to 1,750 kilowatts, enabling applications ranging from building HVAC and battery energy storage cooling to hyperscale data center infrastructure.
Garrett has secured early production wins for E-Cooling compressors in mobility applications with a major Chinese bus and truck HVAC supplier, with production expected to begin in 2027.
Garrett’s Expanding Presence in Power Generation
Alongside cooling, Garrett is also expanding into power generation applications, particularly turbocharging systems used in industrial engines and generator sets. These systems are increasingly deployed to support data center power demand and distributed energy infrastructure.
The company already had a presence in the genset market, but management indicates that demand is rising rapidly due to the growth of data centers and global electricity consumption. Garrett has developed a new range of products for large engines and has already secured original equipment wins and retrofit opportunities in this segment.
Investor Takeaway
Management expects industrial cooling to become a meaningful revenue contributor over the next few years. The segment alone is projected to exceed 5% of total company revenue by the end of the decade as new programs ramp up.
Power generation and industrial turbo applications are also expected to grow quickly, supported by rising global energy demand and the increasing need for backup and distributed power for digital infrastructure.
That said, execution risk is concentrated in the new platform ramps. The company’s expansion into industrial cooling and electrified powertrain components is still in early stages. Any delays in program launches, slower adoption, or supply-chain challenges could hinder expected growth ramp and limit near-term benefits from these businesses.
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Is GTX Finding a New Edge in Industrial Cooling & Power?
Key Takeaways
Garrett Motion (GTX - Free Report) is expanding beyond its traditional automotive turbocharger business into industrial cooling and power generation applications. With that, the company aims to diversify revenue streams, leverage existing high-speed turbomachinery technologies, and tap into fast-growing end markets such as data centers, HVAC systems, and distributed power generation.
Strategic Rationale for Diversification
The company’s diversification strategy is rooted in the changing dynamics of the automotive sector and the broader energy transition. While Garrett continues to grow its core turbocharger business across gasoline, diesel, and hybrid vehicles, management is increasingly focused on applying its engineering capabilities to non-automotive markets where similar technologies are valued. Garrett’s expertise in high-speed electric motors, oil-free bearings, turbomachinery, and power electronics provides a natural entry point into industrial applications.
Industrial cooling and power generation are particularly attractive because they are experiencing strong structural demand. The expansion of hyperscale data centers, the electrification of infrastructure, and the need for energy-efficient HVAC systems are driving increased demand for both cooling capacity and reliable power supply. These trends create a sizable opportunity for Garrett to deploy its technologies outside of vehicle applications.
In the broader supplier landscape, peers like BorgWarner (BWA - Free Report) and Modine Manufacturing (MOD - Free Report) illustrate how auto-focused component makers can widen their addressable markets by combining electrification with thermal-management and efficiency-oriented products.
GTX’s Industrial Cooling Tech & Trane Collaboration
A key pillar of Garrett’s diversification strategy is its entry into industrial HVAC cooling systems. The company has developed an oil-free, high-speed centrifugal refrigerant compressor designed for commercial cooling applications. These compressors are designed to improve energy efficiency and reduce total cost of ownership for operators. Testing indicates that the solution can deliver more than 10% real-world energy savings compared with existing technologies.
To accelerate commercialization, Garrett recently announced a strategic collaboration with Trane Technologies. Under this partnership, Garrett’s next-generation compressors will be integrated into Trane’s commercial HVAC systems, including rooftop units, modular chillers, and large-scale chillers used for data center cooling. Initial units are expected to reach select customers in 2026, with broader production ramping up from 2027.
The company also launched its broader E-Cooling compressor portfolio at the AHR HVAC industry show. The product range spans cooling capacities from roughly 25 kilowatts to 1,750 kilowatts, enabling applications ranging from building HVAC and battery energy storage cooling to hyperscale data center infrastructure.
Garrett has secured early production wins for E-Cooling compressors in mobility applications with a major Chinese bus and truck HVAC supplier, with production expected to begin in 2027.
Garrett’s Expanding Presence in Power Generation
Alongside cooling, Garrett is also expanding into power generation applications, particularly turbocharging systems used in industrial engines and generator sets. These systems are increasingly deployed to support data center power demand and distributed energy infrastructure.
The company already had a presence in the genset market, but management indicates that demand is rising rapidly due to the growth of data centers and global electricity consumption. Garrett has developed a new range of products for large engines and has already secured original equipment wins and retrofit opportunities in this segment.
Investor Takeaway
Management expects industrial cooling to become a meaningful revenue contributor over the next few years. The segment alone is projected to exceed 5% of total company revenue by the end of the decade as new programs ramp up.
Power generation and industrial turbo applications are also expected to grow quickly, supported by rising global energy demand and the increasing need for backup and distributed power for digital infrastructure.
That said, execution risk is concentrated in the new platform ramps. The company’s expansion into industrial cooling and electrified powertrain components is still in early stages. Any delays in program launches, slower adoption, or supply-chain challenges could hinder expected growth ramp and limit near-term benefits from these businesses.
Garrett Motion currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research