Al Root

Shares of heating, ventilation, and air conditioning provider Johnson Controls soared after a solid quarterly earnings report. Guidance, and maybe even Google, helped too.

Wednesday morning, Johnson Controls reported adjusted fiscal first-quarter earnings per share of 64 cents on sales of $5.4 billion. (The company's fiscal year ends in September.)

Wall Street had expected earnings per share of 59 cents on sales of $5.4 billion, according to FactSet.

For fiscal 2025, management now expects earnings per share of $3.50 to $3.60. That's up a dime from recent guidance. Wall Street currently projects $3.47 a share.

Johnson Controls stock was up 12.7% in early trading at $87.09, while the S&P 500 and Dow Jones Industrial Average were down about t0.4% and 0.2%, respectively.

Johnson Controls shares are trading at a record high, according to Dow Jones Market Data.

Jefferies analyst Stephen Volkmann noted orders were up 16% year over year and called profit margin performance "solid" in a Wednesday report. He rates Johnson Controls stock at Buy with a $95 target price.

Along with the quarter, Google parent Alphabet might be helping Johnson Control shares. Alphabet said it plans to spend $75 billion on new capital in 2025. That's up from about $53 billion in 2024, and more than the $59 billion Wall Street was projecting.

A lot of that spending will be for building artificial-intelligence data centers, benefiting a host of companies including Johnson Controls. Those data centers need to be cooled off.

Full-year "order growth of 7% in the year was led by data-center demand and contributed to our record backlog," said Johnson Controls CEO George Oliver on the earnings conference call.

Data-center revenue, which isn't specifically disclosed, doubled year over year, according to the CEO.

Oliver's comments and Alphabet's spending are a relief to investors who feared that the emergence of the Chinese AI app DeepSeek might lead to lower spending from data-center companies. DeepSeek was allegedly developed for a fraction of the cost of other AI models, creating the impression that useful AI might not cost as much to develop as previously expected.

So far, that fear hasn't come to fruition. There is no slowdown in spending yet -- or in business momentum at Johnson Controls.

Write to Al Root at allen.root@dowjones.com

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February 05, 2025 10:54 ET (15:54 GMT)

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