Water-technology company Pentair is having its best day in more than six years -- and in the process, offering fresh proof that the artificial-intelligence infrastructure trade still has legs.
Pentair stock jumped 12% to $62.08 Tuesday and was the best performer in the S&P 500 index. Shares were heading for their best single-day percentage gain since March 24, 2020, according to Dow Jones Market Data. Meanwhile, the S&P 500 rose 0.5%.
Pentair does most of its business in water filters, pumps, and swimming pool equipment, but it also manufactures water-cooling systems for AI data centers. It turned in a third-quarter earnings beat and solid guidance Tuesday, offering some relief for a stock that has plunged 47% this year through the closing bell Monday.
A dark cloud has loomed over Pentair stock since its disastrous second quarter in which it slashed 2026 full-year guidance, reported lower-than-expected earnings, and saw its chief financial officer resign, prompting a 15% single-day drop on July 15.
The gains on Tuesday, however, may have shown that the bleeding has stopped. Sales in Pentair's flagship pool segment tumbled 18% as distributors worked through excess inventory ahead of the 2027 season, but its commercial water operations more than picked up the slack. Income for Pentair's water solutions division rose 16% to $121 million, while its flow division income climbed 15% to $69 million, driven by solid margin expansion in systems that pump and treat water for commercial facilities.
Pentair also reaffirmed the midpoint of its full-year adjusted earnings guidance at around $4.70 a share. Management said that its outlook incorporates its $1.4 billion acquisition of heating and cooling systems manufacturer Taco Group Holdings, which closed on Oct. 1, in addition to the recent inventory clearance.
"Taco provides Pentair with an additional growth engine and increases our exposure to attractive end markets, including HVAC data centers and related infrastructure development," management said on the earnings call Tuesday.
Investors' enthusiastic reaction mirrors momentum found elsewhere in the AI infrastructure trade. Among the best S&P performers on Tuesday was fuel-cell maker Bloom Energy, which climbed 7.7%, extending its 135% rise this year as of the closing bell Monday. The rally has largely been driven by investor expectations that the data-center buildout will fuel demand for its power solutions. Morgan Stanley previously named Bloom Energy as a "key beneficiary" of the data-center buildout.
Sure, AI spending fears have given investors reason for pause. But Pentair's post-earnings stock rally gives cause for hope that the stocks of companies keeping data centers powered and cooled still have room to rise.
Comments