LOS ANGELES — Artificial intelligence (AI) adoption is accelerating among commercial HVAC and construction contractors, as firms look for ways to manage rising costs and improve operational performance, according to a new report from ServiceTitan.
The company’s 2026 Commercial Specialty Contractor Industry Report, based on a survey of more than 1,000 commercial construction leaders, found that 38% of contractors now report measurable business impact from AI, up from 17% in 2025.
According to ServiceTitan, contractors are moving beyond experimentation and applying artificial intelligence in high-value areas such as cost estimation and budgeting (24%) and bid management (22%). The technology is being used to enhance existing systems rather than replace them, improving day-to-day decision-making and operational efficiency.
“The next AI leaders in the commercial and construction markets will be defined by how seamlessly intelligence is embedded across the entire workflow,” said Alex Kablanian, senior vice president and general manager of commercial and construction markets at ServiceTitan.
The report indicates that contractors are entering 2026 with steady demand. Forty-one percent of respondents said they are optimistic about market conditions, while 38% remain neutral. More than three-quarters reported at least nine months of secured work, including 41% with more than a year of backlog.
Despite strong pipelines, contractors continue to face cost pressures. Rising wages were reported by 71% of firms, up from 55% in 2025, alongside ongoing challenges related to labor shortages and material costs.
With greater visibility into future work, contractors are placing more emphasis on profitability. ServiceTitan found that 61% of firms are prioritizing revenue growth through new projects, while 45% are focused on increasing project margins. To support these goals, 57% are working to improve billing timelines, and 38% are closely managing labor costs.
Cash flow management is also becoming more proactive. The report found that 67% of contractors are using lines of credit to fund materials, while 56% are negotiating extended supplier terms to better align expenses with payment schedules. Change orders, which increase project value by 5% to 20% for 59% of firms, are driving the need for stronger documentation and financial oversight.
The findings also highlight ongoing challenges with fragmented technology systems. Only 20% of contractors report operating on a single platform, with many relying on separate tools for accounting, project management, and estimating. According to ServiceTitan, this creates an opportunity to consolidate systems, improve workflow efficiency, and gain better visibility into project and financial performance.
Overall, the report points to a broader shift toward technology-driven operations, as contractors look to balance strong demand with rising costs while improving efficiency, cash flow, and profitability.
