AAON, Inc. (AAON): A Bull Case Theory

We came across a bullish thesis on AAON, Inc.  on Kairos Research’substack. In this article, we will summarize the bulls’ thesis on AAON. AAON, Inc. 's share was trading at $79.46 as of July 17^th. AAON’s trailing P/E were 38.88 according to Yahoo Finance.

AAON, a leading U.S. manufacturer of semi-custom and fully custom HVAC systems, has delivered over 100,000% returns since its IPO but is down nearly 45% from its November 2024 high amid weak bookings in its AAON-branded segment and a broader HVAC slowdown. Despite near-term headwinds, AAON’s BASX brand is thriving, fueled by hyperscale data center demand, with revenue growing at a 40% CAGR and a $625 million backlog up 123% year-over-year.

BASX, now 26% of sales, could reach parity with AAON-branded equipment in five years, underpinning double-digit company-wide growth. AAON’s value proposition lies in energy-efficient, highly configurable systems that command a price premium yet offer lower lifetime costs, enabling the company to steadily gain share in the replacement HVAC market.

Its competitive edge stems from fully integrated engineering and manufacturing, unmatched R&D capabilities at the Norman Asbjornson Innovation Center, and advanced automation, enabling AAON to launch new products ahead of peers. Decarbonization and regulatory tailwinds bolster long-term demand, while expanding national accounts and data center growth present additional opportunities.

Financially, AAON maintains a conservative balance sheet, with minimal debt and historically high returns on capital, even amid heavy CapEx to expand capacity, temporarily pressuring free cash flow. Founder Norman Asbjornson remains on the board, with CEO Matt Tobolski steering the company through its next growth phase.

While trading at ~40x earnings, AAON’s strong market position, durable moat, and BASX-driven growth support the premium. Key risks include economic cyclicality, customer concentration, and elevated valuation, but the company remains well-positioned to compound value over the long term.

Previously we covered a bullish thesis on Carlisle Companies Incorporated (CSL) by Max Dividends in April 2025, which highlighted its strong commercial construction positioning, efficiency initiatives, and robust earnings growth prospects. The company’s stock has appreciated about 7.24% since our coverage as modernization demand held steady. The thesis still stands. Kairos Research shares a similar view but emphasizes AAON’s energy‑efficient, customizable HVAC solutions and BASX-driven data center growth.

AAON, Inc.  is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held AAON at the end of the first quarter which was 29 in the previous quarter. While we acknowledge the potential of AAON as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.