Artificial intelligence (AI) is all the rage on Wall Street and Main Street. But, at the end of the day, AI is just a fancy computer program. That has material business implications that extend well beyond the technology sector. One of the big stories is the increase in demand for electricity to power the new AI data centers being built.
Notably, electricity demand in the U.S. market rose 10% between 2005 and 2025. It is expected to increase by 60% between 2025 and 2045, at least partly driven by AI. That's a step change in demand and highlights just how powerful a trend AI is for non-tech companies. And it also highlights the opportunity for a different AI support technology: cooling. Here's why Trane Technologies (TT +0.52%) and Carrier Worldwide (CARR +0.37%) are hitting records on this key, forward-looking metric.
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High-power computers generate a lot of heat
If you've ever put a laptop on your actual lap while using it, you know that computers generate a lot of heat. This isn't such a big deal when you are talking about a single, consumer-oriented computer. AI doesn't "live" on these devices. It runs on specialized computers with high-power chips. These computer chips draw a lot of power, which is why reliable access to electricity is a major limiting factor for artificial intelligence.
The key is that AI isn't running on one single computer with a high-power chip. It is running in a data center, a building filled with computers powered by high-power chips. The power draw from these buildings is so large that Elon Musk actually built his own power plant to provide electricity to Space Exploration Corporation's (SPCX +2.22%) Colossus I and Colossus II data centers.
NYSE: TT
Key Data Points
Every high-powered computer in a data center generates heat. Cooling is so important that Elon Musk has pitched building data centers in outer space. That's a great idea, but the world still needs terrestrial data centers, which are driving cooling demand right here on planet Earth. Trane Technologies and Carrier Worldwide are tapping into that demand right now.
Record backlogs for Trane and Carrier
When Trane reported second-quarter 2026 earnings, it highlighted that organic revenues were up 9% and adjusted earnings rose 11%. Both are solid numbers for an industrial company. But the biggest number was the $12.1 billion backlog, a record for the company. And, notably, that figure was up 70% year over year. That growth was driven by the company's commercial business, which is the one that sells cooling equipment to data centers. In fact, the company's book-to-bill ratio was 135%, which basically means it is signing dramatically more new sales than it is filling right now.
A backlog provides a line of sight into future sales because it reflects sales that haven't been filled yet. With a record backlog, Trane is clearly capitalizing on the opportunity to sell cooling equipment to data centers. But it isn't alone; Carrier is getting in on the act, too.
Carrier's second-quarter 2026 organic revenues rose 3%, with adjusted earnings off by 7%. That's clearly not as impressive. But, like Trane, Carrier has a record backlog, which currently sits at $8 billion. The backlog is up 40% year over year and 20% sequentially from the first quarter. That highlights the massive growth in demand as AI spending heats up.
NYSE: CARR
Key Data Points
But here's the really interesting math. Carrier's orders rose 40% year over year. Its commercial orders jumped 65%. And orders from data centers increased by a massive 300%. Very clearly, the driving force for the company's backlog right now is the huge demand for cooling coming from AI data centers. And like Trane, Carrier's record backlog bodes very well for the future.
A big opportunity and a big price tag
There's a very real reason to be excited about the future for Trane and Carrier. But Wall Street is already aware of it, with both companies' price-to-sales and price-to-earnings ratios currently above their five-year averages. At this point, only more aggressive growth investors are likely to be interested in the stocks. But if you believe that the AI revolution is a game-changing technology, the AI infrastructure opportunity could have a long runway ahead.
