Trane (TT -0.96%) and Carrier (CARR -1.72%), two of the world's largest heating, ventilation, air conditioning, and cooling (HVAC) companies, are generally considered slower-growth, cyclical companies that generate stronger sales in hotter summers and warmer housing markets.
But in recent years, both companies have experienced a surge in orders from data centers. As the AI market expanded, many pure-play cooling companies couldn't meet the refrigeration needs of hyperscalers, whose requirements skyrocketed as AI clusters grew hotter with every new generation of accelerators from Nvidia (NVDA -0.33%) and other chipmakers.
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In response, those hyperscalers turned to established HVAC leaders such as Trane and Carrier to close that gap. That transition was natural, since both companies already sold massive commercial chillers and had many established enterprise relationships. That secular shift drove many investors to revalue Trane and Carrier as higher-growth AI infrastructure plays. But should investors really consider them AI plays rather than cyclical HVAC plays?
How fast are Trane and Carrier growing?
From 2021 to 2025, Trane's revenue and EPS grew at CAGRs of 11% and 21%, respectively. Trane doesn't break out its data center market as a stand-alone segment, but analysts believe it accounted for about a fifth of its commercial HVAC sales or 10% of its total revenue in 2025.
That might not seem like a huge amount, but Trane's backlog swelled 70% year over year to a record $12.1 billion in the second quarter of 2026. That's equivalent to 57% of its 2025 revenue. That growth was mainly driven by its soaring orders of data center chillers.
NYSE: TT
Key Data Points
From 2021 to 2025, Carrier's revenue grew only at a 1% CAGR, while its EPS declined at a negative 2% CAGR. However, that decline was driven by the divestment of its legacy fire and commercial units and its acquisition of Viessmann Climate Solutions in 2024. By shedding its lower-margin, slower-growth businesses and expanding its higher-growth climate and thermal management businesses, it put itself in a better position to profit from the AI boom.
Carrier's direct data center sales accounted for about 10% of its commercial HVAC sales and 5% of its total revenue in 2025. For 2026, it expects its data center revenue to rise by about 50% and account for roughly 7%-9% of its top line. In the second quarter of 2026, its backlog grew 40% year over year to $8 billion. That's equivalent to 37% of its 2025 revenue.
NYSE: CARR
Key Data Points
Both companies are clearly benefiting from the AI boom. Still, Trane's growth rates are stronger, its backlog is larger and expanding faster, and it hasn't made any major structural changes to its business over the past few years.
Trane's greater focus on custom-applied industrial chillers also gave it an early advantage over Carrier, which focuses more on light-commercial and residential units, among hyperscalers. That's why Trane's stock rallied more than 130% over the past five years, while Carrier's stock rose by less than 10%.
Which HVAC stock has more upside potential?
From 2025 to 2028, analysts expect Trane's revenue and EPS to grow at CAGRs of 10% and 16%, respectively. That growth should be driven by the execution of its backlog, which includes new modular cooling plants (from its acquisition of Stellar Energy) for data centers and liquid-cooling solutions (from its takeover of LiquidStack) for next-generation AI chips. It should also benefit from decarbonization mandates that require upgrades to older HVAC systems.
From 2025 to 2028, analysts expect Carrier's revenue to grow at CAGRs of 6% and 22%, respectively. That growth should be driven by the data center boom, the stabilization of its North American residential HVAC sales, and its integration of Viessmann Climate Solutions.
Trane and Carrier both trade at 30 times this year's earnings. Those are historically high multiples, so I wouldn't rush to buy either stock as an AI infrastructure play in this turbulent market. But if I had to pick one over the other, I'd stick with Trane because it's a cleaner play on the data center market with less exposure to the messier residential market. It also makes sense to buy the higher-growth stock if it's trading at a comparable valuation to its slower-growth competitor.
