JPMorgan's Steve Tusa talks industrials outlook for 2026
December 23, 2025 • 5m 30s
? (Anchor)
00:00.350
our
next
guest
joins
us
with
his
twenty
twenty
six
outlook
JP
morgan
senior
analyst
steve
tusa
steve
thanks
for
being
here
today
help
us
break
down
this
sector
because
i
think
it
was
maybe
one
of
the
more
surprising
winners
of
the
year
where
within
industrials
do
you
see
the
? (Anchor)
00:15.880
most
opportunity
right
now
yeah
Steve Tusa (Senior Analyst)
00:18.510
thanks
for
having
me
first
of
all
great
see
jake
morgan
making
new
highs
but
putting
that
aside
putting
that
aside
this
year
was
kind
of
like
a
tale
of
two
halves
where
it
was
a
lot
a
lot
of
growth
focus
in
the
first
half
obviously
you
had
all
the
tariff
dynamics
things
went
up
Steve Tusa (Senior Analyst)
00:34.990
they
went
down
and
and
in
in
june
we
kind
of
made
the
comment
the
last
time
we
were
on
saying
things
were
basically
back
to
where
we
started
the
year
but
really
in
the
second
half
there
was
a
dramatic
divergent
in
performance
obviously
everything
in
this
group
you
mentioned
G
Steve Tusa (Senior Analyst)
00:50.030
vernon
caterpillar
i
don't
cover
those
stocks
but
they're
still
part
of
the
same
trade
everything
starts
and
ends
with
the
data
center
trade
and
while
there's
been
a
little
bit
of
consternation
recently
about
you
know
the
sustainability
and
duration
of
the
cycle
the
demand
for
Steve Tusa (Senior Analyst)
01:05.790
anything
data
center
in
the
second
half
is
absolutely
off
the
charts
and
getting
better
through
year
end
so
everything
in
this
group
and
every
anytime
you
talk
about
industrials
it's
going
to
start
and
with
data
centers
where
the
divergence
was
is
mostly
around
residential
HVAC
Steve Tusa (Senior Analyst)
01:24.430
names
i
cover
and
actually
some
of
the
cyclicals
that
have
gotten
cheap
and
are
just
driven
by
industrial
production
in
general
capex
started
to
get
a
bid
in
the
last
really
three
months
and
that's
been
a
big
divergent
in
the
back
half
of
the
year
so
you
know
group
has
kind
of
Steve Tusa (Senior Analyst)
01:39.550
performed
below
the
S
and
P
up
seven
percent
versus
the
S
and
P
up
fifteen
but
significant
divergent
within
and
maybe
a
little
bit
less
concentration
than
we've
seen
in
in
the
in
the
prior
year
in
twenty
four
? (Anchor)
01:50.430
so
then
if
you're
an
investor
and
you're
looking
to
kind
of
shift
or
reallocate
your
portfolio
going
into
twenty
twenty
six
do
you
stick
with
the
winners
here
do
you
stick
with
that
AI
data
center
build
out
trade
or
do
you
opt
for
some
of
the
names
that
may
have
been
more
beaten
? (Anchor)
02:04.510
down
here
well
Steve Tusa (Senior Analyst)
02:07.690
my
data
center
names
that
i
cover
including
something
like
vertiv
just
recently
went
into
basically
bear
market
territory
so
this
is
officially
a
pretty
significant
dip
and
is
a
very
different
value
proposition
than
what
we
may
have
seen
even
two
months
ago
on
you
know
i
i
would
Steve Tusa (Senior Analyst)
02:27.570
say
some
news
flow
i
think
news
would
be
probably
a
generous
characterization
a
lot
of
speculation
on
in
a
negative
sense
i
would
stick
with
that
on
the
growth
side
and
then
secondarily
to
kind
of
take
all
this
debate
about
where
the
economy
is
going
we
really
like
idiosyncratic
Steve Tusa (Senior Analyst)
02:44.710
margin
stories
and
johnson
controls
would
be
the
other
one
outside
of
vertiv
still
has
some
data
center
exposure
but
a
really
tremendous
operating
improvement
story
where
earnings
can
grow
fifteen
to
twenty
percent
for
the
next
few
years
and
the
stock
is
pretty
reasonably
priced
Steve Tusa (Senior Analyst)
03:01.150
so
those
are
our
two
and
you
could
call
them
two
parts
of
the
barbell
but
they're
both
kind
of
data
center
related
so
not
not
quite
as
as
a
expansive
of
a
barbell
as
we've
been
in
the
past
yeah
? (Anchor)
03:11.510
it
sounds
like
you
don't
want
to
be
completely
void
of
AI
data
center
exposure
here
what
do
you
definitely
not
Steve Tusa (Senior Analyst)
03:17.110
we
we
we
want
we
want
more
on
the
dip
no
question
i
think
if
we
were
to
look
elsewhere
from
a
general
economic
perspective
dover
and
dupont
are
favor
our
favorite
relatively
cheap
economic
leverage
plays
we're
not
quite
looking
yet
at
the
residential
HVAC
stocks
those
are
the
Steve Tusa (Senior Analyst)
03:34.240
ones
that
have
they're
down
twenty
thirty
percent
in
the
second
half
of
this
year
so
there's
a
little
bit
of
value
appetite
there
but
we
think
people
were
too
early
to
try
and
try
and
time
that
so
maybe
next
year
second
half
will
be
more
interesting
on
that
front
but
for
now
Steve Tusa (Senior Analyst)
03:48.790
really
sticking
with
data
center
idiosyncratic
margin
and
then
a
little
bit
of
economic
leverage
cheap
economic
leverage
we
can
get
it
? (Anchor)
03:54.990
how
does
the
risk
of
overbuild
affect
some
of
these
names
it
sounds
like
sentiment
has
you
know
surrounding
some
of
these
issues
has
caused
people
to
take
a
a
pause
toward
your
end
but
if
there
is
a
significant
risk
here
i
mean
what
what
do
you
see
is
kind
of
the
downside
? (Anchor)
04:11.270
scenario
Autoscroll