Bank of America Securities thinks BorgWarner, the auto-parts supplier, could see its growth reaccelerate in 2027 and 2028, helped by easing electric-vehicle headwinds and a potential new business supplying on-site power gear for AI-hungry data centers. The bank upgraded the stock to buy and lifted its price objective to $85, after a 24% pullback left shares trading around $58.
Why BorgWarner has been stuck in a slow patch
BorgWarner, a major supplier of turbochargers, transmissions, and other components to automakers worldwide, has been in a sluggish phase as some EV programs held back growth. The company has been investing heavily in electrification, but the pace of EV adoption has been uneven, and some automakers have delayed or scaled back their EV plans. That has weighed on BorgWarner's near-term results and kept its stock under pressure.
BofA argues that this changes in 2027, when more of BorgWarner's previously "won" contracts finally start shipping. The bank notes that these "foundational" awards make up about 58% of the company's announced wins so far this year. In other words, a large chunk of the business BorgWarner has already secured is still in the pipeline, and the revenue from those contracts is expected to flow in the next few years.
The AI data-center angle
The other angle is outside autos. BorgWarner makes a turbine generator system that can help provide on-site electricity. As data centers add capacity to run AI workloads, they need reliable power, and on-site generation is becoming more attractive. BofA expects that unit to reach 2 gigawatts of capacity by the end of 2028 and says additional capacity could be announced in early 2027.
This is a meaningful shift for a company that has been viewed primarily as an auto-parts maker. Data centers are a fast-growing market, and the demand for power is surging as AI models require massive computing resources. For context, AI chip demand remains red-hot, and that is driving a boom in data-center construction. BorgWarner's turbine generators could become a key piece of that infrastructure.
What it means for investors
Auto suppliers often trade at a discount because car production rises and falls, which makes next year's profits harder to pin down. A disclosed capacity goal – like 2 gigawatts of turbine-generator output by end-2028 – gives investors something more measurable than the next vehicle build cycle. They can watch for capacity additions, customer signings, and any early-2027 expansion announcement.
If AI-driven data-center demand turns into steady orders, the business can start to look more like multi-year infrastructure supply than a purely cyclical car play. That matters for valuation: whether the market treats BofA's $85 target as plausible may depend on how quickly investors "underwrite" that 2027-2028 non-auto ramp, rather than waiting for the revenue to show up in reported results.
There are risks, of course. The EV headwinds could persist longer than expected, and the data-center power market is competitive. But the bank's upgrade suggests it sees a clearer path to growth than the market is currently pricing in.
Broader context: AI and power demand
The AI boom is reshaping not just chipmakers but also the companies that supply the infrastructure around them. Data centers need enormous amounts of electricity, and that is creating opportunities for companies that provide power generation, cooling, and other supporting systems. Some investors worry about the debt-fueled data-center boom, but the underlying demand for power is real.
BorgWarner is not the only company trying to tap into this trend. Data-center construction is booming, and memory demand is surging as AI workloads expand. The question for BorgWarner is whether it can convert its turbine generator technology into a meaningful revenue stream.
Bottom line
For everyday investors, the key takeaway is that BorgWarner is no longer just an auto-parts company. It has a potential second growth engine in data-center power, and that could help it break out of the cyclical auto-supplier mold. But the payoff is still a couple of years away, and the stock's valuation will likely hinge on how much credit investors give to that future growth.
As always, this is an analyst's view, not a recommendation to buy or sell. It's worth watching for the early-2027 announcement that BofA expects, and for any signs that the turbine generator business is winning customers beyond the auto sector.
