From air conditioning to artificial intelligence: The companies profiting from the cooling business

Heat waves are no longer a meteorological anomaly in Europe but a reality with profound economic, social and public-health implications. The record temperatures recorded in recent days have exposed, particularly in Northern European countries, the shortcomings of infrastructure designed for a temperate climate. This new reality is fuelling a debate that extends far beyond the climate emergency itself: how much governments, businesses and households will need to invest to adapt to a warmer world. Cooling — from household air conditioning to the sophisticated systems required by artificial intelligence data centers — is emerging as one of the major economic opportunities of the coming decade.

Analysts at Goldman Sachs believe that extreme heat and drought will increasingly be viewed as structural risks rather than temporary phenomena, a shift that could accelerate investment in climate adaptation. As temperatures rise, so does demand for cooling systems.

The issue has already entered the political arena. France’s far-right National Rally party has proposed a €20 billion ($22.8 billion) investment plan to expand air-conditioning installations in both public and private buildings. The extraordinary temperatures seen this summer are affecting politics, public health and economic productivity. For investors, that translates into opportunities in climate-control companies, whose shares are up around 30% this year.

The cooling industry has already been boosted by a force almost as powerful as climate change: artificial intelligence. The rapid growth of AI is driving demand for computing capacity and increasing the electricity consumption of data centers, which require ever more sophisticated cooling systems to operate efficiently. Elon Musk has even floated the idea of moving data centers into space — though without explaining how. Heat waves and AI, two seemingly unrelated trends, are therefore giving momentum to the same industry: cooling.

Goldman Sachs has identified 42 international companies that are well positioned to benefit from rising demand for cooling, both in households and in the data centers underpinning the AI boom. Among the best placed is U.S.-based Carrier Global. The company takes its name from Willis Haviland Carrier, the engineer widely credited with inventing the first modern air-conditioning system at the beginning of the 20th century.

More than a century later, Carrier’s business is once again at the center of one of the biggest economic transformations driven by global warming and the expansion of AI.

The company’s shares have gained 32.6% so far this year. Despite that strong performance, analysts believe there is still room for further upside. One of the key reasons for this optimism is soaring demand from data centers. In its latest earnings presentation, Carrier revealed that orders linked to data-center projects had increased by 500%, highlighting the enormous cooling requirements generated by the rollout of AI infrastructure.

Another company that analysts see as well positioned to benefit from the artificial intelligence boom is Johnson Controls. After divesting its residential and small-commercial HVAC business to Bosch in 2025, the company has sharpened its focus on higher-growth, higher-margin segments, with data centers becoming one of its top priorities.

The market is beginning to reward that strategic shift: Johnson Controls shares have gained 19% so far this year. The company is targeting annual organic revenue growth of more than 10%, driven largely by its data-center business, one of the fastest-growing segments of the industrial cooling market. The opportunity is substantial. According to Bloomberg Intelligence, the global market for thermal-management equipment used in data centers could more than double between 2025 and 2030, reaching $35 billion to $40 billion.

Among companies with the greatest exposure to the residential air-conditioning market, Daikin stands out as the world’s largest manufacturer of air-conditioning systems. Its shares have risen nearly 30% this year, broadly in line with the 27% gain posted by the AdvisorShares HVAC and Industrials ETF, which specializes in companies linked to heating, ventilation and air conditioning. Launched in 2025, the fund offers investors exposure to the cooling theme, although many European retail investors cannot access it because it lacks the Key Information Document (KID) required under EU regulations.

The Japanese company, listed in Tokyo, is particularly well positioned to benefit from rising demand for cooling equipment in Europe. Unlike mature markets such as Japan, where air-conditioning penetration is already very high, Europe starts from a much lower base.

Goldman Sachs analysts note that while air conditioning was already common in countries such as Greece, Italy, and Spain in 2024, adoption rates remained relatively low across many of Europe’s largest population centers.

That picture may be changing. According to World Health Organization Director-General Tedros Adhanom Ghebreyesus, Europe is the fastest-warming continent. Average temperatures are already 2.5°C above pre-industrial levels, compared with a global increase of 1.4°C.

Yet the fact that both heat waves and AI are driving greater demand for cooling does not mean the industry’s growth path will be straightforward. Political debates over the energy consumption and environmental impact of air conditioning are being compounded by infrastructure challenges. The simultaneous expansion of air-conditioning systems and data centers threatens to place additional strain on electricity grids that, in many countries, are already showing signs of strain.

At the same time, some major European cities, including London, are promoting planning regulations that prioritize passive-cooling solutions and more energy-efficient building designs, with the aim of reducing dependence on air conditioning without sacrificing thermal comfort.

The paradox is that Europe has spent decades preparing to cut emissions, but it must now also learn to cope with increasingly extreme temperatures. In that process, cooling is shifting from a comfort-related amenity to a critical adaptation tool.

Whether in homes or in the data centers powering the AI revolution, demand for cooling is expected to rise steadily in the years ahead. For companies in the sector, that represents a multibillion-dollar business opportunity. For governments and consumers, it is a reminder that the cost of adapting to a warmer world is already beginning to mount.

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