Honeywell’s post-spin surge: data centers fuel growth spike

Honeywell’s October 22 report mattered because it was presented as the first full quarter of the company in its new form: a standalone pureplay automation business after the aerospace spinoff. Beta Finch said “this one's special because it's the first full quarter for Honeywell as a standalone pureplay automation company,” making the quarter less a routine earnings print than an early test of whether the post-spin Honeywell could produce cleaner growth, sharper execution, and a financial profile strong enough to validate the strategic separation.

That validation came through in the numbers. Beta Finch wrote, “Organic sales growth came in at 7%, which actually beat the high end of the targets management laid out at their investor day back in June,” while “Margins expanded by 370 basis points to over 21%… a big chunk of that came from… Stranded cost elimination,” and CEO Vimal Kapoor said Honeywell was on track to remove the remaining stranded costs by year-end, just six months after the spinoff, showing the new structure was being executed ahead of schedule.

The backlog is filling because two capex waves are reinforcing each other: a multi-year energy build cycle and the power-intensive expansion of data centers. Beta Finch said Honeywell’s backlog stood at nearly $19 billion, up 7% excluding divestitures, and that P A&T's backlog was up double digits driven by LNG and energy project wins. Management said it is entering a multi year energy upcycle, while data-center development is forecast at two times plus growth through 2030, reaching almost 16 gigawatts in one market and 150 gigawatts by 2030 in the United States.

That demand mix also supports better margins because the same projects increasingly require software-led optimization, not just hardware, and because operators are under pressure to squeeze more output from expensive energy assets. Honeywell says its LNG tools connect near real-time asset monitoring with advanced process control so setpoints can be adjusted automatically, while digital twins let engineers test changes before deployment. Lawrence Livermore Lab data shows data-center electricity use rising from 58 terawatt hours in 2014 to nearly 200 in 2024 and 650 by 2030, helping explain why full-year organic growth guidance moved to 4% to 5% from 3% to 4%, even as management said margin pressure continues into the first half of 2027 before a second-half inflection as catalyst volumes ramp and acquisition integration matures.

Data-center infrastructure is no longer a niche adjacency for industrial suppliers; it is emerging as a broad second growth engine because the buildout touches far more than server rooms. Trends described the opportunity as spanning “power generation” through Caterpillar, “high voltage transmission lines” through Quanta Services and Eaton, which was said to be “really well positioned on the 800 volt side,” plus construction bottleneck fixes such as “modular fabrication,” while also noting that “the pipeline of projects have increased by 3x for data centers… 300 Gigawatts… Almost as much power as the US consumes,” later rising to “380 gigawatts worth of pipeline.” Even when asked about a “Texas moratorium on new power hookups” and a “New York moratorium for one year,” the analyst said “we track this… it’s been about 11% of stranded capacity… That really hasn’t changed.”

That breadth helps explain why Honeywell’s own data-center orders more than doubled and why management now treats the theme as spreading across multiple segments rather than one product bucket. Beta Finch said management called it a “pan Honeywell strategy,” with demand moving beyond building automation into process automation and industrial automation, including liquid cooling systems and power infrastructure; outside Honeywell, the same pattern is visible in suppliers such as Shuangdeng, whose first-half 2026 AIDC energy-storage revenue reached RMB1.3853 billion, up 34.8% year on year and equal to 52.5% of total revenue, while new AIDC orders rose more than 80%, and Anshi, which generated RMB156 million (about $23 million) from data-center backup batteries in 2025, representing 16.5% of main-business revenue out of total company revenue of RMB962.3 million.

Honeywell’s earnings acceleration is not just a volume story; it is being engineered through a faster-than-planned removal of post-spin stranded costs. Vimal Kapur said the company “预计将在2026年底完全消除所有剩余的搁浅成本，这比最初计划提前了大约6个月,” and CEO Vimal Kapoor also said on the call they are “on track to eliminate all remaining stranded costs by the end of this year, just six months after the spinoff,” which the analysis called “ahead of schedule” and “a real signal”; Beta Finch linked that directly to “调整后每股收益增长了34%，达到2.27美元,” noting EPS growth came “还来自于他们的成本控制——他们消除搁浅成本的速度比预期要快得多”; in the Q3 discussion, adjusted EPS rose 34% as margins expanded 370 basis points to above 21%, with a big chunk of that improvement attributed to stranded-cost elimination.

At the same time, Honeywell is trying to make demand more durable and higher margin by layering AI-enabled software and services onto equipment already in the field. In Q&A, Kapur said the company turned lower-growth fire and safety into a higher-growth business “通过新产品介绍、Forge软件平台和数据中心等新垂直领域的独特产品,” while Beta Finch said Forge’s annual recurring revenue target is about 15% growth versus roughly 12% to 13% today; that software push is showing up alongside monetization metrics, with project sales up 14%, meaning backlog is converting into revenue, and free-cash-flow conversion reaching 95%, with Q4 expected above 100%.

Honeywell’s October 22, 2026 Q3 release matters because it arrived as a single, consolidated proof point rather than a scattered set of signals. AlphaStreet News captured that compression in one headline — “Honeywell Technologies Beats EPS, Doubles Data‑Center Orders, Raises 2026 Outlook on $19B Backlog” — explicitly pairing “Doubles Data‑Center Orders” with “Raises 2026 Outlook on $19B Backlog,” while Beta Finch’s earnings analysis showed the same report also carried “霍尼韦尔报告有机销售增长7%” and “他们扩大了370个基点的利润率，达到了21%以上,” uniting growth and profitability in the same disclosure.

What makes that release the clearest proof point is that the operating metrics moved together inside one quarter’s update, not across separate events or management narratives. Beta Finch noted that “他们的数据中心订单增长超过100%,” and when Andrew Kaplowitz asked about the surge, Vimal said it “最初只是建筑自动化业务的一部分，但现在他们看到它跨越了流程自动化和工业自动化”; in the same report, Honeywell also showed “他们有一个强劲的积压——接近190亿美元,” with Q4 momentum supported by “流程自动化的项目积压转化” and “数据中心和LNG看到了特别强劲的需求.”