Johnson Controls: Bank of America sees great potential in the AI boom

The search for a new CEO at Johnson Controls could act as a positive catalyst according to the latest analysis by Bank of America. The bank has upgraded Johnson Controls' stock from "Neutral" to "Buy" and raised the price target from 76 to 80 USD. This corresponds to a potential increase of around 15% compared to the current price. Johnson Controls offers a broad range of industrial products, including security cameras and HVAC systems, and stands out as a provider of top-tier data center infrastructures. According to analyst Andrew Obin, Johnson Controls is the second-largest provider of refrigeration units worldwide, with leading market shares in cooling systems. Additionally, the company sells building automation systems, security and fire protection equipment to data centers. This year, Johnson Controls is expected to generate approximately 4 billion USD in revenue from the data center sector, accounting for around 14% of its total business. In comparison, the data center exposure of its closest competitors, Trane Technologies and Carrier, is significantly less. A particularly in-demand product from Johnson Controls are liquid cooling systems that balance the immense heat generated by AI servers. One megawatt of energy delivered to a data center requires about 285 tons of cooling, which matches the demands of a 10,600-square-meter commercial building. Here, Johnson Controls' water-cooled centrifugal chillers and computer room air handling systems come into play. Besides the successful data center division, Bank of America highlighted the search for a new CEO as a potential turning point for Johnson Controls. Analyst Obin expects an announcement before year-end and sees it as a positive impetus. Coupled with the engagement of activist investors, this could indicate a new strategic direction for the company. Compared to other often highly valued AI stocks, Johnson Controls also offers investors an attractive safety margin. The stock is traded at a significant discount compared to its closest competitors. The forward price-earnings ratio is 18, which is even below the S&P 500 average of about 21. Since the beginning of the year, shares of Johnson Controls have already increased by 22%, owing to the growing recognition by investors of the importance of the company's data center activities.