Buy Woodward Stock for AI Data Center and Aerospace Upside

Woodward, Inc. (WWD) is an energy conversion and control solutions powerhouse, benefiting from the soaring demand for artificial intelligence data centers, increased defense spending, and beyond.

WWD stock has soared 50% in the past three months after investors held their ground at a key technical level. The energy conversion company’s surge to fresh highs is part of a 1,600% charge over the last 20 years to crush the S&P 500’s 437% and its Aerospace sector’s 50%.

Woodward’s improving earnings revisions land the stock a Zacks Rank #2 (Buy) heading into its Q3 fiscal 2025 earnings release on July 28.

WWD Stock: Aerospace Innovation and AI-Boosted Energy Expansion

Woodward is poised for growth due to robust demand in its aerospace segment, driven by a recovering commercial aviation market and increased defense spending. WWD's industrial segmentis  benefiting from rising power generation needs for AI data centers.

Woodward designs and manufactures energy conversion and control solutions for the aerospace and industrial markets, including power generation, transportation, and renewable energy systems. The Fort Collins, Colorado-based company plays a critical role in powering everything from planes and cargo ships to renewable energy systems while ensuring they run smoothly.

Its Aerospace segment produces fuel systems, actuators, control solutions, and more for commercial and military aircraft. The company focuses on improving efficiency and sustainability, serving industry titans such as Boeing and Airbus.

For example, WWD last year landed a deal with Boeing and NASA to help build a new aircraft that uses far less fuel as the aviation industry attempts to reach net-zero emission by 2050.

WWD’s industrial segment provides control systems and more for power generation, oil and gas, and beyond. In the energy sector, Woodward is vital for hydro turbines, steam turbines for nuclear, waste-to-energy, geothermal, and more.

Its reciprocating engine segment is gaining traction as large internal-combustion engines are deployed for base-load generation and critical backup power at AI data centers and microgrid applications.

WWD’s Growth Outlook, Outperformance, and Technical Levels 

Woodward grew its revenue by an average of 14% over the past three years, and boosted its adjusted EPS by 45% in FY24 and 52% in FY23. Its FY25 outlook (for the period ending in September) is slightly less impressive as it faces a tough comparison.

Still, WWD is projected to grow its revenue by 4% in FY25 and 8% in FY26, boosting adjusted earnings by 3% and 17%, respectively.

WWD’s recent upward EPS revisions earn it a Zacks Rank #2 (Buy), and it’s topped our estimates by an average of 15% in the last four quarters. The company’s earnings are projected to expand significantly over the next several years (see chart above).

WWD has surged 370% in the past decade and 220% in the last five years, leaving its sector and the benchmark in the dust. Its 50% climb in 2025 has it trading at all-time highs heading into its earnings release.

The energy conversion and control solutions stock broke out into a new trading range in May after finding support at its 52-week lows. WWD might face selling pressure and test its 50-day after its breakneck rally to help recalibrate its valuation which has grown a bit stretched.

But no one knows when the current rally will end. Long-term investors don’t need to attempt the exact market timing game on the aerospace and energy parts maker growing alongside the AI boom and more. Plus, Woodward raised its dividend by 12% for FY25.

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This article originally published on Zacks Investment Research (zacks.com).

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