Borgwarner's AI Sales Potential Drives Stock Performance
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 19 2024
0mins
Source: SeekingAlpha
Borgwarner Inc (BWA) saw a price increase of 5.01% as it crossed above its 5-day SMA, reflecting strong investor interest.
Analyst Colin Langan from Wells Fargo highlighted that Borgwarner could see approximately $2.4 billion in added data center sales by 2028, driven by its potential in turbine generators and battery energy storage systems. This positive outlook on AI sales potential is a significant catalyst for the stock's performance.
The implications of this analysis suggest that Borgwarner is well-positioned to capitalize on the growing demand for AI-related technologies in the automotive sector, which could lead to sustained growth and investor confidence.
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Analyst Views on BWA
Wall Street analysts forecast BWA stock price to fall
9 Analyst Rating
5 Buy
4 Hold
0 Sell
Moderate Buy
Current: 71.840
Low
49.00
Averages
52.00
High
55.00
Current: 71.840
Low
49.00
Averages
52.00
High
55.00
About BWA
BorgWarner Inc. is engaged in clean technology solutions for combustion, hybrid and electric vehicles. The Company operates in four segments. The Turbos & Thermal Technologies’ technologies include turbochargers, e-boosters, e-turbos, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, among others. The Drivetrain & Morse Systems segment’s products include control modules, friction and mechanical clutch products for automatic transmissions, torque-management products and rear-wheel drive (RWD) and all-wheel drive (AWD) transfer case systems and coupling systems. The PowerDrive Systems segment’s products include power electronics such as inverters, onboard chargers, DC/DC converters and combination boxes, and others. The Battery & Charging Systems segment’s products include lithium-ion battery systems for electrified bus, truck and off-highway applications and DC fast chargers suitable for all types of electric vehicles.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Hidden Investment Opportunities in the AI Revolution
- AI Investment Opportunities: With $700 billion expected to be spent on AI in 2026, significant investment opportunities arise for lesser-known companies, particularly traditional firms crucial to data center construction.
- BorgWarner's Performance: BorgWarner (BWA) has seen its stock rise 56% year-to-date, reaching a market cap of $14.9 billion, with earnings projected to grow 5.5% in 2026 and accelerate to 11.2% in 2027, indicating its potential in AI infrastructure.
- Caterpillar's Strong Growth: Caterpillar (CAT) shares are up 66.9% year-to-date, with earnings expected to grow 29.2% in 2026 and 24.3% in 2027, reflecting surging demand from data center projects, despite a high P/E ratio of 38.4.
- United Rentals' Market Position: United Rentals (URI), the largest equipment rental company globally, has seen a 29.6% stock increase year-to-date, with earnings projected to rise 12.4% in 2026 and 12.2% in 2027, showcasing strong performance in large projects.
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BorgWarner Rated Among Top EV Stocks by Hedge Funds
- Analyst Price Target Increase: BofA analyst Alexander Perry raised BorgWarner's price target from $65 to $78 while maintaining a 'Neutral' rating, indicating significant near-term opportunities linked to AI-driven data center demand, reflecting market confidence in the company's growth potential.
- UBS Rating Upgrade: UBS upgraded BorgWarner from 'Neutral' to 'Buy' and increased its price target from $61 to $95, noting the firm is best positioned to capitalize on non-auto opportunities, with expectations that non-auto segments will contribute 23% of revenue and 30% of EBIT by 2030, driving 19% annual earnings growth from 2027 to 2030.
- 2026 Outlook Unchanged: BorgWarner maintained its 2026 outlook, projecting net sales between $14.0 billion and $14.3 billion, with adjusted EPS expected between $5.00 and $5.20 and operating cash flow of $1.7 billion, demonstrating the company's stability and growth potential in the coming years.
- Diverse Technology Solutions: BorgWarner provides technology solutions for combustion, hybrid, and electric vehicles, operating across various segments including Turbo and Thermal Technologies, Drivetrain, and Battery Systems, highlighting its crucial role in the transition to electric vehicles.
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BorgWarner Options Trading Analysis
- Put Option Appeal: The current bid for the $70.00 strike put option is $3.60, and if an investor sells this option, they effectively commit to buying the stock at $66.40, making it an attractive alternative compared to the current price of $70.55, potentially drawing more investor interest.
- Expiration Risk Assessment: The probability of the put option expiring worthless is 57%, and if it does, the premium would yield a 5.14% cash return, equating to an annualized return of 29.33%, highlighting the potential profitability of this strategy.
- Call Option Returns: The $72.50 strike call option has a current bid of $3.90, and if an investor buys shares at $70.55 and sells this call option, they could achieve an 8.29% total return if the stock is called away at expiration, showcasing the profit potential of this strategy.
- Market Volatility Analysis: The implied volatility for the put option is 47%, while for the call option it is 50%, compared to an actual trailing twelve-month volatility of 38%, indicating a heightened market expectation for future price fluctuations, necessitating careful risk assessment by investors.
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- Tesla's Self-Driving Tech: Piper Sandler reiterates Tesla as overweight, highlighting progress in its full self-driving software despite ongoing market skepticism, reflecting competitive pressures in the autonomous driving sector.
- Hyliion Stock Rating: Needham initiates coverage of Hyliion Holdings with a Buy rating and a $9 target, indicating strong performance in power solutions and showcasing the company's market potential and growth momentum.
- Healthcare Market Opportunity: Barclays upgrades Oscar Health from equal weight to overweight, believing the company's single-line exposure to the Individual ACA market provides direct leverage for potential multi-year re-rating, signaling recovery in margins.
- Nvidia Stock Attractiveness: Rosenblatt reiterates Nvidia as a Buy, emphasizing its leadership in AI computing and strong growth visibility, with shares currently trading at a ~35% discount to peers, indicating significant investment value.
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Wells Fargo Sees Significant AI Upside for Auto Sector Stocks
- AI Sales Potential: Analyst Colin Langan noted that with data centers growing at over 20% CAGR, BorgWarner (BWA) could see approximately $2.4 billion in added DC sales by 2028, highlighting its strong potential in turbine generators and battery energy storage systems.
- Market Leadership: TE Connectivity (TEL) dominates the copper DC connector market, with projected AI sales of $2.4 billion in 2026 and over $3 billion in 2027, further solidifying its leadership position in the sector.
- Future Market Opportunities: Aptiv (APTV) is seen as a potential AI standout; although its current connectors do not align with market needs, the shift to 800V DC is expected to open new market opportunities starting in Q4 2027, potentially leading to direct competition with existing players.
- Ford's Transition: Ford (F) is transitioning its Kentucky facility for energy storage, and while Wells Fargo only raised its 2028-2030 outlook by $0.05, it still indicates potential benefits in the AI sector for the automaker.
See More
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- Starwood Underperformance: Jim Cramer noted that Starwood Property Trust has not performed well, and he has not recommended the stock, indicating concerns about its future growth and potential impact on investor confidence.
- Ralliant's Parabolic Rise: Ralliant is viewed as a good company, but its stock has gone parabolic, leading Cramer to advise caution, suggesting investors should be aware of valuation risks.
- Borgwarner's Strong Performance: Borgwarner is described as an absolute winner, yet its stock also exhibits a parabolic trend, with Cramer's comments highlighting the need for investors to be wary of potential pullback risks.
- Reddit Investment Approach: Cramer has a positive outlook on Reddit, believing its unique business model is worth attention, but he recommends a slow accumulation strategy rather than aggressive buying to mitigate risks associated with high valuations.
See More
Hidden Investment Opportunities in the AI Revolution
- AI Investment Opportunities: With $700 billion expected to be spent on AI in 2026, significant investment opportunities arise for lesser-known companies, particularly traditional firms crucial to data center construction.
- BorgWarner's Performance: BorgWarner (BWA) has seen its stock rise 56% year-to-date, reaching a market cap of $14.9 billion, with earnings projected to grow 5.5% in 2026 and accelerate to 11.2% in 2027, indicating its potential in AI infrastructure.
- Caterpillar's Strong Growth: Caterpillar (CAT) shares are up 66.9% year-to-date, with earnings expected to grow 29.2% in 2026 and 24.3% in 2027, reflecting surging demand from data center projects, despite a high P/E ratio of 38.4.
- United Rentals' Market Position: United Rentals (URI), the largest equipment rental company globally, has seen a 29.6% stock increase year-to-date, with earnings projected to rise 12.4% in 2026 and 12.2% in 2027, showcasing strong performance in large projects.
See More
BorgWarner Rated Among Top EV Stocks by Hedge Funds
- Analyst Price Target Increase: BofA analyst Alexander Perry raised BorgWarner's price target from $65 to $78 while maintaining a 'Neutral' rating, indicating significant near-term opportunities linked to AI-driven data center demand, reflecting market confidence in the company's growth potential.
- UBS Rating Upgrade: UBS upgraded BorgWarner from 'Neutral' to 'Buy' and increased its price target from $61 to $95, noting the firm is best positioned to capitalize on non-auto opportunities, with expectations that non-auto segments will contribute 23% of revenue and 30% of EBIT by 2030, driving 19% annual earnings growth from 2027 to 2030.
- 2026 Outlook Unchanged: BorgWarner maintained its 2026 outlook, projecting net sales between $14.0 billion and $14.3 billion, with adjusted EPS expected between $5.00 and $5.20 and operating cash flow of $1.7 billion, demonstrating the company's stability and growth potential in the coming years.
- Diverse Technology Solutions: BorgWarner provides technology solutions for combustion, hybrid, and electric vehicles, operating across various segments including Turbo and Thermal Technologies, Drivetrain, and Battery Systems, highlighting its crucial role in the transition to electric vehicles.
See More
BorgWarner Options Trading Analysis
- Put Option Appeal: The current bid for the $70.00 strike put option is $3.60, and if an investor sells this option, they effectively commit to buying the stock at $66.40, making it an attractive alternative compared to the current price of $70.55, potentially drawing more investor interest.
- Expiration Risk Assessment: The probability of the put option expiring worthless is 57%, and if it does, the premium would yield a 5.14% cash return, equating to an annualized return of 29.33%, highlighting the potential profitability of this strategy.
- Call Option Returns: The $72.50 strike call option has a current bid of $3.90, and if an investor buys shares at $70.55 and sells this call option, they could achieve an 8.29% total return if the stock is called away at expiration, showcasing the profit potential of this strategy.
- Market Volatility Analysis: The implied volatility for the put option is 47%, while for the call option it is 50%, compared to an actual trailing twelve-month volatility of 38%, indicating a heightened market expectation for future price fluctuations, necessitating careful risk assessment by investors.
See More
Latest Wall Street Ratings Overview
- Tesla's Self-Driving Tech: Piper Sandler reiterates Tesla as overweight, highlighting progress in its full self-driving software despite ongoing market skepticism, reflecting competitive pressures in the autonomous driving sector.
- Hyliion Stock Rating: Needham initiates coverage of Hyliion Holdings with a Buy rating and a $9 target, indicating strong performance in power solutions and showcasing the company's market potential and growth momentum.
- Healthcare Market Opportunity: Barclays upgrades Oscar Health from equal weight to overweight, believing the company's single-line exposure to the Individual ACA market provides direct leverage for potential multi-year re-rating, signaling recovery in margins.
- Nvidia Stock Attractiveness: Rosenblatt reiterates Nvidia as a Buy, emphasizing its leadership in AI computing and strong growth visibility, with shares currently trading at a ~35% discount to peers, indicating significant investment value.
See More
Wells Fargo Sees Significant AI Upside for Auto Sector Stocks
- AI Sales Potential: Analyst Colin Langan noted that with data centers growing at over 20% CAGR, BorgWarner (BWA) could see approximately $2.4 billion in added DC sales by 2028, highlighting its strong potential in turbine generators and battery energy storage systems.
- Market Leadership: TE Connectivity (TEL) dominates the copper DC connector market, with projected AI sales of $2.4 billion in 2026 and over $3 billion in 2027, further solidifying its leadership position in the sector.
- Future Market Opportunities: Aptiv (APTV) is seen as a potential AI standout; although its current connectors do not align with market needs, the shift to 800V DC is expected to open new market opportunities starting in Q4 2027, potentially leading to direct competition with existing players.
- Ford's Transition: Ford (F) is transitioning its Kentucky facility for energy storage, and while Wells Fargo only raised its 2028-2030 outlook by $0.05, it still indicates potential benefits in the AI sector for the automaker.
See More
Jim Cramer's Insights on Various Stocks
- Starwood Underperformance: Jim Cramer noted that Starwood Property Trust has not performed well, and he has not recommended the stock, indicating concerns about its future growth and potential impact on investor confidence.
- Ralliant's Parabolic Rise: Ralliant is viewed as a good company, but its stock has gone parabolic, leading Cramer to advise caution, suggesting investors should be aware of valuation risks.
- Borgwarner's Strong Performance: Borgwarner is described as an absolute winner, yet its stock also exhibits a parabolic trend, with Cramer's comments highlighting the need for investors to be wary of potential pullback risks.
- Reddit Investment Approach: Cramer has a positive outlook on Reddit, believing its unique business model is worth attention, but he recommends a slow accumulation strategy rather than aggressive buying to mitigate risks associated with high valuations.
See More
