Carrier Earnings Could Send the Stock to a New All-Time High

Carrier Global shares fell 9% after Q2 2026 earnings despite beating revenue and earnings estimates, as margin compression and rising input costs weighed on results. Data center orders surged more than 300% year-over-year, pushing backlog above $8 billion and prompting management to raise full-year data center sales guidance to about $2 billion. Carrier raised full-year 2026 sales and EPS guidance, but analysts should note weaker Asia Pacific, Middle East, and Africa margins and a consensus price target implying over 17% upside.

Carrier Global Corp. NYSE: CARR is up 20% in 2026, but it’s hardly been a smooth ride for shareholders. Over the last 12 months, CARR is down more than 20%. It also dropped 9% on the day of its Q2 2026 earnings report. The company is best known for providing residential and commercial heating and cooling systems. Continued softness in the housing market is unlikely to change in 2026. But the volatility, both good and bad, stems from the company’s growing role in the AI infrastructure trade.

The power needed to operate data centers has put energy stocks in focus. That power generates heat, requiring efficient, 24/7 heating and cooling solutions. Carrier is not the only name in this space, which includes companies like Vertiv Holdings NYSE: VRT. However, as the company’s Q2 2026 earnings report makes clear, the data center pie is big enough for many companies to have a slice.

Carrier beat expectations on both revenue and earnings, with revenue rising 3.9% year over year. That makes the stock price drop confusing at first glance, since management also raised full-year guidance. The disconnect comes down to the current quarter. Adjusted earnings per share (EPS) came in at 86 cents, down 7% year-over-year. Adjusted operating margin compressed 190 basis points to 17.2%. Free cash flow, however, jumped to $810 million from $568 million a year ago. Margin pressure is the real story here. Management pointed to an unfavorable mix and rising input costs that offset pricing gains. That's not what investors want to see from a stock trading at growth-stock multiples, even with the top line accelerating.

The bull case for Carrier increasingly runs through its data center business. Total orders were up roughly 40% year-over-year in Q2. Data center orders alone were up more than 300%. Backlog now exceeds $8 billion, up about 40% year-over-year and 20% sequentially. Management raised full-year data center sales guidance to roughly $2 billion, up from a prior $1.5 billion estimate. Carrier is also expanding manufacturing and lab capacity in the U.S. and India to keep pace with demand. That's a signal management expects this trend to extend well past 2026, not just capture a temporary AI infrastructure wave.

The company’s Residential business is showing signs of life as well. Second-quarter sales rose in the high single-digits, better than expected, with field inventory down about 25% year-over-year. Management now expects full-year residential sales growth, reversing a prior guide that called for a decline.

Carrier now expects full-year 2026 sales of about $23 billion, up from a prior $22 billion guide. Adjusted EPS guidance rose to about $2.90 from $2.80. Free cash flow guidance held steady at roughly $2 billion. Not every region is contrib...