Gold is hot, but 'cold' is too as investors buy into air-conditioning companies like Carrier, Trane and Johnson Controls amid record heat

Even before triple-digit temperatures reached Europe and the U.S. more recently, air conditioning and ventilation were viewed as companies ripe for growth given the AI boom’s demand for industrial cooling systems. Traditional air-conditioning units do not suffice for data centers since the AI hardware generates enormous heat and advanced liquid cooling is necessary to remove it.

What analysts are saying

Analysts say that the scorching heat presents a new opportunity for expanded use of air-conditioning — particularly in Europe — since A/C isn’t common in many European nations. Only 25% of French homes have an A/C unit, while the proportion doubles to 50% for Spanish and Italian homes, according to the BBC.

“Relatively low penetration of air conditioning in Europe coupled with seemingly more frequent and hotter heat waves we think could be [supporting] growing AC use in the region,” Citibank analysts wrote in a June 26 client note provided to Moneywise.

By comparison, over 90% of U.S. homes are equipped with an A/C unit, per the BBC.

Climate researchers said last year that Europe is warming at twice the global average, the fastest rate of any continent. Scientists have warned that extreme weather events are likelier as a result, which could include more frequent heat waves.

The HVAC companies that could be winners

There’s a “tailwind” forming for U.S.-based HVAC companies, according to Citi.