In an unexpected turn for the heating, ventilation, and air conditioning (HVAC) sector, industry stalwarts Trane and Carrier are witnessing a remarkable uptick in orders for their advanced cooling systems, largely fueled by the relentless expansion of artificial intelligence (AI) technology and its demanding data center infrastructure. Traditionally categorized as mature, cyclical businesses, these companies are now at the forefront of providing essential thermal management for the burgeoning AI ecosystem. The intense heat generated by next-generation AI accelerators, particularly from powerhouses like Nvidia and other chip manufacturers, has outstripped the capabilities of many specialized cooling providers, forcing hyperscalers to seek robust solutions from established HVAC giants.
HVAC Leaders Pivot to High-Growth AI Infrastructure
For years, Trane Technologies Plc (TT) and Carrier Global (CARR) were perceived as entities tied to the seasonal whims of temperature and real estate markets. However, the burgeoning artificial intelligence market has profoundly reshaped their trajectory. As AI clusters become increasingly dense and computationally intensive, the need for sophisticated, high-capacity cooling systems has escalated dramatically. Data centers, the nerve centers of AI operations, are no longer just seeking power; they are desperate for efficient cooling to prevent overheating and ensure optimal performance.
This unprecedented demand has led major data center operators to partner with companies like Trane and Carrier. With their extensive experience in large-scale commercial chilling and established enterprise relationships, these HVAC leaders were uniquely positioned to bridge the cooling gap. This strategic pivot has prompted a re-evaluation of their market standing, with many investors now considering them vital AI infrastructure plays rather than mere cyclical HVAC providers.
Between 2021 and 2025, Trane's revenue saw an impressive compound annual growth rate (CAGR) of 11%, with earnings per share (EPS) soaring by 21%. Although Trane does not segment its data center contributions, analysts estimate that this segment represented approximately a fifth of its commercial HVAC sales or 10% of its total revenue in 2025. A significant indicator of future growth is Trane's backlog, which surged by 70% year-over-year to an all-time high of $12.1 billion in the second quarter of 2026, equating to 57% of its 2025 revenue. This remarkable growth is predominantly attributed to the escalating demand for its data center chillers, underscoring its pivotal role in the AI infrastructure landscape.
Conversely, Carrier's revenue growth between 2021 and 2025 was more modest at a 1% CAGR, with EPS experiencing a slight decline of 2%. This performance, however, was influenced by strategic divestitures of its traditional fire and commercial units and the acquisition of Viessmann Climate Solutions in 2024. By streamlining its portfolio to focus on higher-growth climate and thermal management solutions, Carrier has strategically positioned itself to capitalize on the AI boom. Carrier's direct data center sales constituted about 10% of its commercial HVAC sales and 5% of its total revenue in 2025. For 2026, the company projects a 50% increase in data center revenue, anticipating it will contribute roughly 7%-9% to its top line. Its backlog also grew by 40% year-over-year to $8 billion in the second quarter of 2026, representing 37% of its 2025 revenue.
Trane's proactive acquisitions, including Stellar Energy for modular cooling plants and LiquidStack for liquid-cooling solutions tailored for next-generation AI chips, further solidify its market leadership. Both companies are also expected to benefit from global decarbonization mandates that necessitate upgrades to existing HVAC systems. While both Trane and Carrier are currently trading at a historically high valuation of 30 times this year's earnings, Trane's stronger growth trajectory and dedicated focus on industrial-scale cooling solutions for data centers, coupled with less exposure to the more volatile residential market, make it a more compelling investment in the AI infrastructure sector.
The rapid evolution of the AI industry has created an unprecedented opportunity for specialized infrastructure providers. The journey of Trane and Carrier from traditional HVAC companies to crucial players in the AI ecosystem highlights the dynamic interplay between technological advancement and industrial adaptation. Their success underscores the critical importance of robust cooling solutions in enabling the computational demands of artificial intelligence. This shift not only presents a lucrative market for these companies but also emphasizes the foundational role of often-overlooked industrial sectors in supporting cutting-edge technological progress. It's a vivid reminder that innovation often relies on a network of diverse industries working in concert, with each component playing an indispensable part in shaping the future.
