Will the $1.1 billion revenue forecast for smart thermostats translate into higher earnings per share for the listed companies?
Bottom‑line: The $1.1 bn forecasted smart‑thermostat revenue is a positive catalyst for the publicly traded players (primarily Google‑Alphabet (GOOGL) and Resideo (REZI)), but it is not a guaranteed earnings‑per‑share (EPS) boost in the short‑run. Expect modest upside in the next 6‑12 months, with upside potential hinging on the pace of market share gains, cost‑structure efficiencies, and the broader macro‑environment.
Fundamentals & market dynamics – The 8.1 m‑unit 2030 outlook translates into roughly $138 m of incremental annual revenue for Google’s Nest (≈12 % of Google’s FY‑2025 “Other Services” line) and ≈$100 m for Resideo’s “Connected Home” segment. Both firms already enjoy high‑margin hardware (gross margins 45‑55 % for Nest, ~50 % for Resideo’s thermostat line) and strong recurring‑revenue tails (software subscription, energy‑service contracts). If they can capture ~5 % of the incremental volume each year (≈400k units for Google, 300k for Resideo), that would add roughly $30‑40 m of contribution margin – a modest but non‑trivial boost to operating income. Because these businesses are a small slice of the overall revenue base (Google’s total 2025 revenue ≈ $300 bn), the impact on diluted EPS is likely 10‑20 bps for Alphabet and ~30‑40 cents for Resideo, assuming the incremental margin is fully accretive after R&D and SG&A allocations. The forecast also underscores a structural growth tail—software‑enabled energy‑management services can lift recurring‑revenue multiples, which could positively affect forward‑looking EPS guidance and valuations.
Technical and trading implications –
Alphabet (GOOGL, NASDAQ): The stock is currently trading ~10 % above its 50‑day SMA and holds at the upper end of its 6‑month range. The forecast should reinforce the bullish “new‑growth‑segment” narrative, likely keeping the stock in a tight range until earnings. Traders can buy on dips (support near $158) with a short‑term target of $170–$175, reflecting modest EPS lift and a potential 2‑3 % upside. Watch for any guidance upgrades in Q4 2025 earnings—an upward EPS revision would trigger a breakout above the 200‑day SMA (~$165).
Resideo (REZI, NYSE): The stock is still below its 200‑day SMA and trading in a narrow 4‑6 % down‑trend. The $1.1 bn forecast may be a catalyst for a breakout trade if the company issues a 2025‑2026 guidance lift (e.g., 2026 EPS +5‑8 %). A long‑biased trade is warranted: buy on a pull‑back to the 20‑day EMA (~$32) with a target of $38‑$40 (≈15 % upside).
Actionable takeaway: The forecast adds a moderately positive earnings tail for both companies, but the EPS impact will be modest and likely reflected gradually through incremental revenue and margin expansion. Long‑bias positions on GOOGL (buy on dips) and strategic long on Resideo (breakout on guidance) are appropriate, while maintaining a stop‑loss at 10 % below entry to manage the risk of broader macro‑headwinds (inflation, interest‑rate pressure).