Nvidia Sparked a Selloff in SPX Technologies. Is the Data Center Cooling Thesis Actually Broken?

Key Stats for SPX Technologies, Inc.

• 52-Week Range: $172.64 to $251.08
• Street Target Price: $270.67
• Market Cap: $8.75B
• LTM Gross Margin: 40.3%
• LTM EBIT Margin: 15.8%
• Fwd 2-Yr EPS CAGR: ~20%
• Dividend Yield: 0.9%

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One Nvidia Comment Sent This Stock Into Freefall

Most investors have never spent a minute thinking about SPX Technologies (SPXC), and right now that might be a mistake.

The Charlotte, North Carolina industrial company runs two businesses: an HVAC segment that makes precision heating, ventilation, and air conditioning equipment, and a Detection and Measurement segment that builds infrastructure products for utilities, communications, and security applications.

The HVAC side is what the current story hinges on, because data centers need enormous amounts of precision cooling to keep their servers running, and SPX’s cooling towers sit directly in that supply chain.

The selloff that has dragged the stock from above $230 down toward its 52-week low has a specific, nameable cause. Nvidia mentioned warm-water cooling technology during a keynote, and investors immediately read that as a threat to SPX’s air-cooled towers.

The stock fell hard, and TD Cowen pushed back shortly after, arguing that SPX’s cooling towers are essential for heat rejection in liquid-cooled data center systems, meaning the two technologies work alongside each other rather than one displacing the other. The negative sentiment held anyway.

A Q4 2025 earnings report in February added a second layer of concern, with declining margins and a softer organic revenue number spooking investors even though the headline figures came in ahead of expectations. Since then, the stock has carried both narratives at once, and neither has let go.

The EPS chart tells a meaningfully different story than the price action does. Earnings per share have grown every single year from $2.33 in 2021 to $6.76 in 2025, and the forward consensus carries that path toward around $8.47 this year and $10.50 by 2028. What stands out is that analysts have not cut their estimates as the stock has sold off.

They raised their targets after the Q2 beat, meaning the gap between the Street target and the current price widened entirely due to price weakness, not because the earnings outlook changed.

There is a modest step-down in the 2029 estimate to around $9.94, which most likely reflects acquisition contributions normalizing over time rather than any shift in the underlying business.

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The Business Quality Argument Holds Up Under Pressure

The Nvidia narrative has dominated the conversation, but it has also pulled attention away from something worth understanding about this company. SPX Technologies did not catch one good cycle and ride it.

The operating leverage here has been building steadily for years, driven by organic growth, a disciplined acquisition strategy, and a growing mix of higher-margin data center HVAC work within the revenue base.

Five years of operating income data make that argument difficult to dismiss. Starting at $119.6M in 2021, operating income has grown every single year without a down year, reaching $345.5M in 2025, nearly tripling over that stretch. Q2 2026 kept that streak intact: revenue came in at $679M, up nearly 23% year over year, with organic growth of 17% and acquisitions adding another 6%.

Adjusted EPS of $2.02 came in well above the $1.85 estimate, and management raised full-year adjusted EPS guidance to a range of $8.20 to $8.60. The company also lifted its data center capacity expectations to $1.1B from $750M, a 47% increase that reflects real customer commitments rather than forward-looking optimism.

One thing worth flagging is that the Detection and Measurement segment’s strong Q2 margins included a $15M project that was pulled forward from Q3, something management disclosed explicitly. That benefit will not be there in the back half, and the numbers will reflect that.

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What the Valuation Gap Looks Like From Here

The Street’s consensus target sits around $271, implying roughly 55% upside from where the stock trades today.

What makes that number worth paying attention to is the path it took to get there: analysts raised their targets after the Q2 beat while the stock kept sliding lower. Every point of that gap came from price weakness, not from any change in how analysts view the business.

Sitting near a 52-week low at roughly 19x forward earnings, SPXC is trading at a real discount to what the earnings trajectory has historically supported.

The TIKR valuation model’s mid case puts a price target of around $238 over the next 4.3 years, implying roughly 36% in total return at around 7.5% annualized. Revenue is assumed to grow around 7% annually, net income margins expand toward 16%, and EPS grows around 8% per year.

The meaningful drag in the model is P/E compression of around 4% annually, which captures the risk that the market gradually re-rates the multiple lower as data center growth normalizes. Push the time horizon to 2034, and the mid case reaches around $281 at roughly 6% annualized.

The honest tension here is between a conservative model sitting at 7.5% annualized and a Street target implying 55% upside, and how that gap closes depends almost entirely on how the warm-water cooling debate plays out over the next few years.

Should You Buy SPX Technologies Stock?

The bull case is built on the view that the market has misread the Nvidia comment entirely. TD Cowen’s read is that SPX’s towers complement liquid-cooled systems rather than compete with them, and the company’s own decision to raise data center capacity expectations to $1.1B suggests management is not seeing any pullback in customer demand.

A business growing EPS at roughly 20% annually, raising guidance for the third time in a year, trading near a 52-week low at 19x forward earnings, with the analyst community pointing to 55% upside, is the kind of setup that tends to attract serious attention from investors willing to look past a sentiment-driven selloff.

The bear case is that the warm-water cooling concern is not just sentiment. If the direction of data center cooling technology genuinely shifts over time in ways that reduce the role of air-side cooling towers, the tailwind that has driven SPX’s re-rating could fade faster than current estimates assume.

The D&M pulled-forward revenue is a smaller but real reminder that some of the current strength reflects timing, and the model’s P/E compression assumption of around 4% annually is not pessimistic. It is just honest about what happens to multiples when high-growth cycles slow down.

Buying here is a specific bet that the technology narrative is wrong and that the buildout cycle has considerably more runway than the current price reflects.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!