What Happened?
Shares of heating and cooling solutions company AAON (NASDAQ: AAON) jumped 18% in the morning session after it reported third-quarter 2025 results that surpassed Wall Street's expectations on both the top and bottom lines. The company posted revenue of $384.2 million, a 17.4% increase from the same period last year and well ahead of analyst estimates. Adjusted earnings per share also came in better than expected at $0.37. The strong results were underpinned by robust demand, which helped the company's order backlog reach $1.32 billion, an increase of 104% from the prior year. This significant growth in future orders gave investors confidence in the company's sales pipeline, overshadowing a year-over-year decline in operating margin.
Is now the time to buy AAON? Access our full analysis report here.
What Is The Market Telling Us
AAON’s shares are very volatile and have had 23 moves greater than 5% over the last year. But moves this big are rare even for AAON and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 6.1% on the news that markets became increasingly wary of high valuations following a significant AI-driven rally.
The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector. Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years. Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull market.
AAON is down 15% since the beginning of the year, and at $100.20 per share, it is trading 28.8% below its 52-week high of $140.75 from November 2024. Investors who bought $1,000 worth of AAON’s shares 5 years ago would now be looking at an investment worth $2,365.
P.S. In tech investing, "Gorillas" are the rare companies that dominate their markets—like Microsoft and Apple did decades ago. Today, the next Gorilla is emerging in AI-powered enterprise software. Access the ticker here in our special report.
