Bernstein Previews U.S. Multi-Industry and Electrical Equipment 2Q26 Results: Data Center Orders and HVAC Revenue Realization Are Key Variables

Overview

This is Bernstein's 2Q26 earnings preview for companies covered in the U.S. multi-industry and electrical equipment sectors, focusing on VRT, NVT, TT, JCI, and CARR. The report's central issue is not whether quarterly EPS modestly beats expectations, but whether data center-related orders, backlog, delayed revenue recognition, liquid-cooling competitiveness, and the structure of HVAC demand can support high valuations. Overall, the report favors companies with clear data center exposure and strong order visibility, especially NVT; it takes a more neutral stance on CARR because of weakness in residential and European businesses.

Core views

The report believes AI data center capital expenditure remains the most important theme driving these industrial and electrical equipment companies. VRT needs to stabilize confidence in its high multiple through forward-looking order and pipeline commentary; NVT remains at an earlier stage of growth, with orders, backlog, and the new CDU product potentially providing positive catalysts; TT has reliable execution, and data center application HVAC orders are expected to begin converting into revenue; JCI's order improvement will need more time to appear in revenue and profits; CARR's data center growth is strong, but U.S. residential HVAC and European heat pump demand limit rating upside.

Analysis framework

The report uses a company-by-company preview approach, comparing management guidance, BBG consensus, Bernstein model estimates, and investor focus areas. It emphasizes order growth, delayed revenue recognition, incremental margins, product technology roadmaps, and target price changes. For the data center theme, the report further tracks the impact of hyperscaler capital expenditure, semiconductor company orders and backlog, liquid cooling, and changes in power architecture on equipment companies.

Methodology notes

• Earnings PreviewGuidance, Consensus, and Internal Estimate Comparison

  Compare company guidance, BBG or Visible Alpha consensus, and Bernstein forecasts within a common framework.

  The report uses this method to assess whether quarterly revenue, margins, and EPS present meaningful expectation gaps, while emphasizing that for some stocks the true price drivers are future orders and management commentary rather than just the current-quarter financial beat.

• Demand Realization AnalysisOrder-to-Revenue Lag Framework

  Data center HVAC and electrical equipment orders typically take several quarters to be reflected in revenue.

  The report believes TT's order-to-revenue conversion may begin to show this quarter, JCI may lag by approximately one quarter, CARR's data center orders typically have a two- to three-quarter lag, and JCI projects may require three to four quarters for revenue recognition.

• Valuation and CatalystsTarget Price and Rating Review

  Adjust target prices based on EPS forecasts, growth visibility, order strength, and multiple pressure.

  The report raises the target prices for NVT and TT, lowers JCI's target price, and maintains the target prices for VRT and CARR, reflecting different views of each company's near-term earnings and medium-term growth quality.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• VRT / Vertiv Holdings Co

  A core beneficiary with relatively high purity of exposure to data center power and thermal management.

  Strengths

  Existing backlog and order volume support revenue growth over the next approximately 12 months; its scaled, pure data center exposure is scarce, and the report expects 2Q26 EPS to be slightly above the high end of guidance.

  Weaknesses

  The company no longer discloses quarterly orders, increasing market anxiety about order growth, market share, and a slowdown in the second derivative of revenue growth.

  Comparison

  Compared with NVT, VRT is more mature and larger, but also faces higher growth expectations and valuation pressure; compared with HVAC names, it has purer data center exposure.

  Risks

  If management fails to provide strong order or market-share commentary, valuation near the low-30s EV/NTM EBITDA could come under pressure.

• NVT / nVent Electric PLC

  Benefits from data center construction through liquid cooling, Systems Protection, and electrical connections.

  Strengths

  The report names NVT as its top pre-earnings pick, viewing order and backlog visibility as strong; the next-generation CDU and liquid-cooling capacity ramp-up could provide positive catalysts.

  Weaknesses

  Systems Protection orders may be volatile, while the not-yet-launched next-generation CDU is causing fixed-cost absorption to weigh on near-term margins.

  Comparison

  Compared with VRT, NVT is at an earlier growth stage and has less content per MW, but product expansion could generate greater change potential.

  Risks

  The market could be disappointed if organic orders fall to 30% or below, or if the explanation of the new product's technological advantage is insufficient.

• TT / Trane Technologies PLC

  A beneficiary of large-project HVAC and data center cooling demand.

  Strengths

  Execution is stable, and the report expects low- to mid-teens EPS compound growth; incremental margins in the Americas could approach 30%.

  Weaknesses

  Valuation is expensive, and the market needs to see large-project HVAC orders convert into revenue.

  Comparison

  Compared with JCI, TT's data center order inflection comes earlier; compared with CARR, business execution and margin realization are more reliable.

  Risks

  Customer delivery delays, short-term EMEA pressure, or revenue failing to keep pace with orders could weigh on sentiment.

• JCI / Johnson Controls International PLC

  An industrial name driven jointly by improving data center HVAC orders and the company's transformation.

  Strengths

  Orders have been strong over the past two quarters, management's full-year incremental margin guidance is 50%, and successful execution of the transformation could unlock value.

  Weaknesses

  The data center revenue inflection lags TT, the report lowers its Americas growth and EBITA assumptions, and the target price is reduced modestly.

  Comparison

  Compared with TT, JCI lags by approximately one quarter in order-to-revenue realization; compared with CARR, transformation is more important.

  Risks

  If orders cannot sustain approximately 40% to 50% growth, or if the transformation benefit timeline remains unclear, the expanded valuation multiple could come under pressure.

• CARR / Carrier Global Corporation

  Affected jointly by data center chiller growth, U.S. residential HVAC, and European Viessmann heat pumps.

  Strengths

  Data center revenue is growing fastest, with 1Q26 data center orders exceeding 500% growth and 2026 data center revenue ARR of approximately $2.5B.

  Weaknesses

  Data center exposure is the smallest among TT, JCI, and CARR; evidence of a U.S. residential HVAC recovery is insufficient, and European heat pump and boiler demand is unstable.

  Comparison

  Compared with TT and JCI, CARR has greater data center change potential but smaller underlying exposure; compared with VRT and NVT, non-data-center businesses are a more significant drag.

  Risks

  Weak U.S. residential demand, slow inventory reduction, contractor resistance to price increases, lower-than-expected European heat pump penetration, and concerns about overexpansion.

Key data

• VRT Rating and Target PriceOutperform, target price $416, current price $305.58The report maintains an Outperform rating on VRT and expects 2Q26 revenue of approximately $3.5B, an adjusted operating margin of 21.9%, and EPS of $1.48.
• NVT Rating and Target PriceOutperform, target price $220, current price $153.18The target price is raised from $218 to $220; the report expects approximately 28% organic growth in 2Q26, revenue of approximately $1.27B, and EPS of $1.20.
• TT Rating and Target PriceOutperform, target price $555, current price $475.74The target price is raised from $550 to $555; the report expects approximately 5% organic growth in 2Q26, revenue slightly above $6.2B, and adjusted diluted EPS of $4.28.
• JCI Rating and Target PriceOutperform, target price $173, current price $140.62The target price is lowered from $176 to $173; the report expects quarterly revenue of approximately $6.5B and EPS of approximately $1.31 to $1.32.
• CARR Rating and Target PriceMarket-Perform, target price $75, current price $68.67The report expects 2Q26 revenue of approximately $6B, an operating margin of approximately 17%, and EPS of approximately $0.80, with limited divergence from consensus.
• VRT Order ThresholdApproximately 30% organic order growthThe report believes buyers currently view approximately 30% organic order growth as the rough benchmark for VRT to sustain its valuation multiple.
• NVT Order Observation RangeApproximately 40% organic order growth; 65% could be significantly positive; 30% or below could disappointSystems Protection and liquid-cooling products are central to NVT's orders and sentiment.
• TT Data Center ExposureData center revenue represents approximately 15% to 20% of the overall FY26 order bookThe report believes Americas applied HVAC orders have exceeded 100% growth over the past two quarters; revenue realization and approximately 30% incremental margins are key focuses.
• JCI Order and Revenue LagExpected order growth of approximately 40% to 50%; project revenue recognition may require three to four quartersThe report believes the current situation reflects demand deferral rather than demand destruction.
• CARR Data Center Metrics1Q26 data center order growth exceeded 500%, with 2026 data center revenue ARR of approximately $2.5BThe report is focused on whether CSA Americas Commercial order growth can continue to exceed 80% and why CARR is gaining excess share in data center chillers.

Impact & implications

For investors, this report suggests that the key focus of 2Q26 trading should shift from a quarterly EPS beat to data center order quality, revenue realization timing, and management's visibility into future growth. If hyperscaler CapEx, semiconductor orders, and equipment-company backlog remain strong, the high valuations of VRT, NVT, TT, and JCI will be easier to support; if the second derivative of order growth slows and delivery delays are interpreted as demand risk, the related stocks could experience multiple compression. CARR has high-growth data center optionality, but its residential HVAC and European heat pump businesses create a more balanced risk-reward profile.

Risks

• AI data center trading is crowded; if upstream CapEx or semiconductor orders slow, valuations of related industrial stocks could compress rapidly.
• VRT's lack of quarterly order disclosure reduces visibility, and any sign of order slowdown or share loss could amplify volatility.
• Data center orders have a two- to four-quarter lag before converting into revenue; customer delivery delays could cause near-term revenue growth to trail order growth.
• New technology paths such as liquid cooling and 800V DC could change the competitive landscape, creating a risk of share redistribution for VRT, NVT, and other equipment suppliers.
• Residential HVAC demand remains unstable; U.S. distributor feedback, inventory, and pricing resistance could weigh on CARR and certain related businesses.
• European heat pump demand and Viessmann synergies remain uncertain; a hot summer may drive one-time sales rather than structural growth.
• Regional factors such as the conflict in the Middle East could affect TT, CARR, or JCI's EMEA/CSAME margins.

What to watch

• Whether VRT management comments on orders, backlog, pipeline, market share, and 800V DC-related content.
• NVT's Systems Protection order growth, the launch timing of the next-generation CDU, and commentary on the technological advantages of liquid-cooling products.
• Whether TT's Americas applied HVAC orders remain strong and whether large orders begin converting into revenue.
• Whether JCI's order growth remains approximately 40% to 50% and whether the transformation benefit timeline becomes clearer.
• Whether CARR's CSA Americas Commercial order growth continues to exceed 80% and whether its data center chiller share advantage is sustainable.
• U.S. residential HVAC distributor sales, inventory, pricing acceptance, and the path toward a 9 million-unit market.
• European heat pump sales, the degree of weakness in boilers, and whether Viessmann achieves structural rather than weather-driven improvement.
• CapEx by hyperscalers such as Meta, AWS, Alphabet, Microsoft, and Oracle, as well as semiconductor company orders and backlog.