RISING TIDES
Observations from the IMC Research Process


AI’s Cooling Crisis

 

The global data center cooling market is projected to triple from $12B to over $35B by 2030 – fueled by an AI-driven infrastructure boom and thermal demands of hyperscale compute.

  • AI workloads generate intense heat. As Microsoft, Meta, and Amazon invest in more powerful and tightly packed computer chips – like NVIDIA’s GB200 and AMD’s MI300X – thermal output is surging past what traditional systems can handle. To keep everything running safely and efficiently, advanced cooling technology has become just as important as the computing power itself. With $200B+ in AI infrastructure spending projected by 2027, cooling isn’t just a side concern – it’s mission-critical to the AI buildout.
  • Liquid cooling – offering 1,000x the thermal conductivity of air – is rapidly gaining traction. It improves power usage effectiveness (PUE), reduces water consumption, and supports higher rack densities essential for transformer-scale AI models. The shift is already happening in NVIDIA reference designs and hyperscaler RFPs. Cooling vendors are struggling to keep pace as enterprises race to upgrade their data center infrastructure.
  • Cooling stocks are heating up. Direct liquid cooling beneficiaries are scaling up to meet industry needs. Vertiv ($VRT) – full-stack provider with hyperscaler wins in AI-specific deployments; nVent ($NVT) – pure-play on liquid cooling, offering RDHX, in-rack systems, CDUs, and retrofittable thermal platforms; and SPX Technologies ($SPXC) – diversified thermal solutions provider expanding liquid cooling capacity for hyperscale data centers. Asia-based enablers are also gaining momentum: Asia Vital Components – key supplier of cold plates and liquid cooling modules integrated into major server OEMs; King Slide Works – precision mechanical manufacturer with increasing exposure to thermal and rack-level infrastructure.

Global cooling specialists are stepping up to keep the AI boom from overheating – literally. The next generation of winners may not be chipmakers, but the companies keeping them from melting down.

This report is provided for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. IMC or its clients may hold positions in securities mentioned; the mention of specific companies does not imply endorsement or a recommendation. Past trends do not guarantee future results.

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