Wall Street split on Madison Air as AI cooling demand soars

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Analysts highlighted Madison Air’s industry-leading profitability, noting its adjusted EBITDA margin of 26.7% exceeds most HVAC peers due to its focus on specialized, mission-critical air systems for data centers, healthcare facilities, warehouses, and industrial sites.

The company’s “Return on Air” strategy — which emphasizes productivity, uptime, and energy savings rather than commodity equipment pricing — has helped expand margins by more than 450 basis points since 2020, according to analysts.

Much of investor enthusiasm centers on Madison Air’s rapidly expanding data center cooling division, which accounted for roughly 13% of total revenue in 2025 and grew 17% last year. Goldman Sachs forecasts 25% growth in the segment during 2026 as hyperscalers continue investing heavily in AI infrastructure and cooling systems.

The company expects shipments of data center cooling units to more than triple to 10,000 units in 2026 from roughly 3,000 units last year. Madison Air supplies products including cooling distribution units, coil walls, rear-door heat exchangers, and liquid cooling systems used in high-performance computing environments.

Analysts at RBC Capital Markets took a more optimistic stance, highlighting Madison Air’s niche positioning and resilience compared with traditional HVAC manufacturers exposed to cyclical residential air-conditioning markets.

Unlike major HVAC peers, Madison Air does not sell conventional residential heating and cooling systems. Instead, its residential business focuses on indoor air quality products such as filtration, humidification, ventilation, and smart air systems under brands including AprilAire and Broan-NuTone.

RBC estimates at least 30% of Madison Air’s revenue comes from customized systems, allowing the company to maintain stronger pricing power and margins than peers in fragmented HVAC markets.

The company, founded through a series of acquisitions by industrial investor Larry Gies, has completed 13 acquisitions since 2017 and raised approximately $2.3 billion in its April 2026 IPO to reduce debt.