The rapid growth of artificial intelligence (AI) has led to a surge in energy demand in data centers, creating a need for innovative cooling systems. With electricity consumption expected to increase by 30% in the U.S. by 2026, companies like Vertiv Holdings are capitalizing on this trend by providing power and cooling solutions for servers.
Vertiv’s shares have skyrocketed by nearly 700% since the end of 2022, with a record order backlog of $6.3 billion. The company’s focus on thermal management for data centers has proven to be a lucrative business strategy. As more powerful chips generate more heat, traditional air cooling systems are being pushed to their limits, leading to a growing demand for liquid cooling systems.
Goldman Sachs predicts that the server cooling market will reach $10.6 billion by 2026, with liquid cooling becoming increasingly popular. Asian manufacturers like Asia Vital Components and Auras Technology have also seen a surge in their stock prices as they ramp up production to meet the rising demand for cooling components.
While the excitement over cooling tech stocks is understandable, investors should be cautious as valuations have soared to more than 40 times expected earnings. As the industry continues to evolve, it’s important to approach investments in this sector with a level head.
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