Is AAON a Buy? What to Consider in 2026
Last updated July 2026
Short answer
The bull case for AAON (AAON) rests on Data center liquid cooling (BASX): BASX-branded sales rose ~72% year over year in Q1 2026 to ~$229 million, driven by liquid-cooling demand for AI data centers. Revenue (TTM) is ~$1.6B. If you believe that thesis holds, the real questions become position sizing and overlap, not timing. The main risk to that view: Valuation is the central risk: AAON trades at a rich multiple (trailing P/E well above 70), so any growth disappointment could compress the stock sharply. Whether AAON is a buy comes down to whether you believe the thesis. This is informational, not a recommendation, and Walnut is not an investment adviser.
AAON, Inc. engineers and manufactures premium commercial and industrial HVAC equipment, including semi-custom and custom rooftop units, air handlers, energy recovery units, condensing units, water-source heat pumps, and controls. Its 2021 acquisition of BASX and expansion into cleanroom systems and data center thermal management turned a niche rooftop-unit specialist into a supplier of liquid-cooling solutions for AI and cloud data centers, sold under the BASX brand alongside the flagship AAON-branded product line. The investment picture is a growth story bolted onto a stable base. AAON's traditional rooftop business is prized for energy efficiency and durability and generates steady demand tied to nonresidential construction and equipment replacement, while BASX has become the swing factor: data center cooling orders roughly doubled the company's backlog to a record ~$2.13 billion and pushed 2026 revenue growth guidance to ~40%-45%. That upside comes with a premium valuation and heavy reliance on a handful of hyperscale customers, so the story rewards continued execution on capacity expansion and margins.
What's the case for buying AAON?
1. Data center liquid cooling (BASX)
BASX-branded sales rose ~72% year over year in Q1 2026 to ~$229 million, driven by liquid-cooling demand for AI data centers. This segment is the primary growth engine, with the broader data center thermal management market growing roughly 30% annually. It has shifted AAON's revenue mix toward AI infrastructure spending.
2. Record backlog and raised guidance
Total backlog more than doubled to a record ~$2.13 billion, led by BASX data center orders, giving strong forward revenue visibility. Management raised 2026 revenue growth guidance to ~40%-45%, up sharply from an earlier ~18%-20% view. That backlog underpins near-term production planning and capacity utilization.
3. Capacity expansion and core HVAC franchise
Investments across Memphis, Longview, and Redmond facilities are lifting throughput for both BASX and AAON-branded products. The traditional rooftop-unit business remains a benchmark for efficiency and durability, with Alpha Class heat pumps representing roughly a quarter of rooftop sales. This base provides steadier replacement-driven demand alongside the data center surge.
4. Margin and operating leverage
Operating margin edged up to ~11.5% in Q1 2026 even as gross margin compressed to ~25% on ramp-up costs and mix. If AAON absorbs new capacity and normalizes production, scale could support margin recovery. Conversely, continued ramp costs are a near-term drag to watch.
What are the risks to AAON?
Valuation is the central risk: AAON trades at a rich multiple (trailing P/E well above 70), so any growth disappointment could compress the stock sharply. The data center growth story concentrates revenue in a small number of hyperscale customers whose capital spending can be lumpy or slow if AI infrastructure demand cools. Execution risk is elevated as the company ramps new capacity, and gross margins have compressed during the ramp. The core HVAC business remains cyclical and exposed to nonresidential construction, interest rates, and input costs. Larger, better-capitalized competitors such as Vertiv, Johnson Controls, and Carrier are investing aggressively in liquid cooling, which could pressure pricing and share over time.
How is AAON valued? (as of July 2026)
Snapshot for AAON as of July 2026, sourced from Yahoo Finance and may be delayed. Valuation figures move with price and earnings; verify the current numbers with your broker before deciding.
- Revenue (TTM): ~$1.6B
- Q1 2026 revenue: ~$497M (+54% YoY)
- Backlog: ~$2.13B (record)
- Market cap: ~$11B
- Trailing P/E: ~90x-plus
- 2026 revenue growth guidance: ~40%-45%
AAON carries a premium growth valuation, with a trailing P/E well into the double digits and a forward multiple that assumes the data center cooling ramp continues. The record backlog and raised guidance frame the bull case, while the elevated multiple leaves limited margin for error. Gross margin near ~25% reflects ongoing capacity ramp costs.
How do you decide if AAON is a buy?
Rather than asking whether AAON is a buy in the abstract, it tends to help to answer four questions:
- Thesis: do you believe the case above, and is it still true today?
- Time horizon: a single stock can be volatile, so a longer horizon absorbs more of the swings.
- Position sizing: a thesis can be right and the sizing still wrong; decide how much of your portfolio one name should be.
- Overlap: check whether you already hold AAON indirectly through an index or sector ETF before adding more.
For the full picture, see the AAON stock guide (what the company does, the ETFs that hold it, similar stocks, and the themes it fits). In Walnut you can ask its AI about AAON against your real portfolio and see your actual exposure before deciding.
The bottom line on AAON
The bottom line: AAON's story right now is Data center liquid cooling (BASX), with revenue (ttm) at ~$1.6B. If you believe that narrative continues, the call is about sizing AAON sensibly and checking overlap with what you own; if you doubt it (the risk: valuation is the central risk: AAON trades at a rich multiple (trailing P/E well above 70), so any growth disappointment could compress the stock sharply.), it is not for you. Decide from the thesis, not the ticker. Walnut is not an investment adviser.
Build a basket around AAON with Walnut
Use AAON as one constituent in a thematic basket Walnut's AI helps you assemble. Describe a thesis you believe in, the AI proposes the holdings and weights, and you approve before any broker order.
FAQ
Is AAON a good stock to buy right now?
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The case for AAON right now is Data center liquid cooling (BASX), with revenue (ttm) at ~$1.6B. If you believe that thesis holds, AAON is a way to own it and the real questions are sizing and overlap, not timing; the main risk to that view is valuation is the central risk: AAON trades at a rich multiple (trailing P/E well above 70), so any growth disappointment could compress the stock sharply. So it comes down to whether you believe the thesis. Walnut is not an investment adviser and this is not a recommendation.
What does AAON do?
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AAON, Inc.
What are the main risks of AAON?
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Valuation is the central risk: AAON trades at a rich multiple (trailing P/E well above 70), so any growth disappointment could compress the stock sharply. The data center growth story concentrates revenue in a small number of hyperscale customers whose capital spending can be lumpy or slow if AI infrastructure demand cools. Execution risk is elevated as the company ramps new capacity, and gross margins have compressed during the ramp. The core HVAC business remains cyclical and exposed to nonresidential construction, interest rates, and input costs. Larger, better-capitalized competitors such as Vertiv, Johnson Controls, and Carrier are investing aggressively in liquid cooling, which could pressure pricing and share over time.
What does AAON do?
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AAON, Inc. designs and manufactures premium commercial and industrial HVAC equipment, including rooftop units, air handlers, energy recovery units, and heat pumps. Through its BASX brand it also builds data center liquid-cooling and cleanroom systems for AI and cloud infrastructure.
Why is AAON considered a data center stock?
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Its BASX segment supplies liquid-cooling solutions for AI data centers, and that demand has roughly doubled AAON's backlog to a record ~$2.13 billion. BASX sales grew rapidly through 2025 and 2026, shifting the company's revenue mix toward AI infrastructure spending.
How fast is AAON growing?
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Q1 2026 revenue rose ~54% year over year to ~$497 million, and management raised full-year 2026 revenue growth guidance to roughly 40%-45%. The record backlog gives the company strong forward visibility into that growth.
Is AAON expensive?
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AAON trades at a premium valuation, with a trailing P/E well above 70 and a market cap around $11 billion as of July 2026. The multiple reflects high growth expectations, which raises the stakes on continued execution.
Walnut is informational and is not an investment adviser. This page is educational and not a recommendation to buy or sell AAON; figures are approximate and dated, and your own situation, time horizon, and risk tolerance should drive any decision. Verify current data before investing.