Play It Cool: Why Comfort Systems USA Is a Hidden AI Winner

Suppose you heard mention of a stock that’s ridden the artificial intelligence wave to a 1,300% gain over the last five years. In that scenario, you’d probably envision industries like semiconductors, computer software, or maybe cybersecurity.

You’d likely NOT think of an industrial conglomerate that installs air conditioning, but sometimes markets have a sense of humor. 

One of the AI revolution’s biggest winners has been Comfort Systems USA Inc. (NYSE: FIX), a $25 billion HVAC company reaping the benefits of the data center gold rush.

If its order backlog is any indication, FIX investors will be staying cool well into next year.

AI Systems Require Significant HVAC Infrastructure

Artificial intelligence agents may not need to eat, drink, or sleep like humans, but they do need the temperature to be just right. AI data centers consume tremendous amounts of energy, with a significant portion of that energy being used for sophisticated cooling systems.

If you think your energy bills are high in the summer, imagine trying to keep hundreds of thousands of NVIDIA Corp. (NASDAQ: NVDA) GPUs from overheating under unprecedented usage. AI superscalers require specialized HVAC solutions to meet their rapidly expanding needs, with data center cooling expected to become a $42 billion industry by 2032.

That’s a 12.4% compound annual growth rate! This quickly growing market is precisely what companies like Comfort Systems USA are capitalizing on with innovative and customized HVAC solutions.

Comfort Systems USA is actually 45 different companies in one, operating across a vast swath of the U.S. in services like construction, property maintenance, automation controls, and mechanical, electrical, and plumbing (MEP) systems.

Their expertise in the latter area gives the company an advantage when working with AI data centers. Using a strategy called Modular Construction, FIX can fabricate crucial components like air handling units or utility plants off-site and then install them on location. This technique was designed to reduce costs and lead times but also creates a safer construction site environment and enhances quality control. 

The company’s Immersion Cooling is another innovative solution AI hyperscalers crave, as it supplies data centers with precise temperature management systems so servers can be packed closer together, thereby saving on energy consumption.

Most importantly, modular construction allows Comfort Systems USA to scale projects quickly. And if Meta Platforms Inc. (NASDAQ: META) and Microsoft Corp. (NASDAQ: MSFT) earnings this week provide any hints, the demand for data center equipment is only going up from here.

FIX Earnings and Backlog Continue to Impress

What makes an industrial sector stock jump 22% in a day? An earnings report like the one Comfort Systems USA delivered on July 24. The company comfortably topped revenue projections, growing sales 20% year-over-year (YOY) with gross margins jumping from 20.1% to 23.5%.

The $6.53 EPS figure was nearly double the Q2 number from last year, and the company’s $250 million net cash pile gives it plenty of room for more acquisitions. But the real golden nugget in this report was the company’s backlog, which is blowing away even the most optimistic projections.

For the first time in the company’s history, its backlog exceeded $8 billion, jumping from $6.89 billion to $8.12 billion between Q1 and Q2. At this time last year, FIX’s backlog stood at $5.77 billion.

Tacking on more than $2 billion in just 12 months (growth of more than 40%!) shows the immense demand for cooling solutions from AI data centers, and the company seems to have no problem shifting its growing tariff burdens onto customers.

A backlog of this magnitude indicates that FIX is well-positioned to continue growing revenue at a rapid pace into 2026 and beyond. Following the report, FIX stock received its highest analyst price boost yet, a $810 price target from DA Davidson, which suggests further upside of at least 15%.

Chart Indicates Strong Uptrend With Potential for a Short-Term Pullback

Comfort Systems USA is giving investors plenty of reasons to be bullish, and the daily chart also shows an uptrend firmly intact following a Golden Cross signal last month and a parabolic jump following earnings. The 50-day moving average was established as a support level in the days before the report, and volume spiked to its highest level since April following the release.

If there’s a fly in the ointment, it's short-term trading signals like the Relative Strength Index (RSI) hinting at an overextended rally. The RSI screeched higher to 82, well above the 70 number typically considered Oversold territory.

The RSI rolling average is also creeping near 70, and the stock traded down in the two days following earnings. Profit-taking following a 60% year-to-date (YTD) gain is never a bad idea, and new investors might find a better entry point later in the next few weeks, once the post-earnings volatility subsides.

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