In brutal temps, air-conditioning businesses thrive as the cooling industry heats up
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Blastin’ the AC… In the dog days of summer, cooling is king. Scorching temps that saw 150M+ Americans under heat alerts last month have air-conditioning companies booming. Helping business: the average lifespan of an AC unit is 15 to 20 years, meaning thousands of units installed during the recovery from the 2008 financial crisis are due for replacement. Experts say about 10 new AC units will be sold every second through 2050. And cooling giants are reaping the gains:
Big drips: Shares of Trane — which raised its annual outlook after reporting strong growth yesterday — are up 40% YTD. The year’s also been good to rivals like Lennox (up ~32%), Carrier (up 21%), and Aaon (up 19%). The S&P 500 is up 16% over the same period.
The AI play: HVAC companies are also profiting on AI hype as energy-sucking data centers need to stay cool to work optimally. The global market for cooling data centers is set to reach ~$30B by the end of the decade.
Stayin’ cool… will cost ya. AC requires lots of power, which comes with a hefty price. The average US electric bill is expected to set a 10-year record, reaching $720 between June and September. Nearly 80% of US adults are concerned about rising energy bills, and a third have used credit cards, loans, or payment plans to cover them. Prices could rise even more in the next few years as the EPA rolls out new sustainability regulations for the HVAC industry. FYI: air-conditioning accounts for about 4% of global greenhouse-gas emissions.
High temps aren’t going anywhere… Global temps hit the highest levels on record in July. Last year, extreme heat was linked to the deaths of 11K+ people in the US alone. As the climate crisis sends temperatures soaring, more people will pay to beat the heat — spelling hot results for cooling companies. At the same time, more AC use = more emissions.