AI Data Center Cooling and Power
flox✨@floxdairo
−0.4%
since Oct 16
The idea
I believe AI data centers are going to need a lot more cooling and power equipment than the market currently expects, as each new generation of chips runs hotter and hungrier for electricity. This basket spreads across the whole chain: cooling makes up about a third, on-site power and electrical gear each take a fifth, and installers round it out, with a small cash buffer. No single company carries the thesis, since steady leaders sit alongside smaller, faster-growing names. I'm holding for around five years, and I'd rethink this if big tech sharply pulled back data center spending.
What it owns
- AI chips generate extreme heat, forcing data centers to deploy liquid cooling systems, chillers and heat exchangers at unprecedented scale. · Vertiv HoldingsIt sells liquid cooling and power equipment installed directly next to AI racks, making it the most direct play on rising cooling requirements., Trane TechnologiesIt makes large-scale chillers that remove heat from entire data center buildings, anchoring the cooling layer as demand grows., Modine ManufacturingIt is shifting toward data center cooling products with room for faster growth if cooling demand accelerates as expected., nVent ElectricIt makes rack enclosures, cooling systems and electrical connections built around AI racks, so denser heat-generating racks require more of its products., Johnson ControlsIt is one of the largest chiller and building cooling suppliers, anchoring the cooling side as data centers add to its order backlog., AAON IncIt is a smaller HVAC maker pursuing data center cooling contracts with room for significant growth if its products continue winning orders.32%
- Data centers unable to wait years for grid connections are installing turbines, generators and fuel cells to generate their own electricity. · GE VernovaIt manufactures gas turbines for power plants and data centers seeking on-site generation, with turbine production booked out years ahead., CaterpillarIt sells large generators and engines data centers use for backup and primary power, with sales growing alongside data center expansion., CumminsIt manufactures backup generators that nearly every data center requires, providing steady revenue as data center deployments accelerate., Bloom EnergyIt makes fuel cells enabling data centers to generate on-site power when grid connections cannot be established quickly, representing the most aggressive power independence bet.22%
- Switchgear, transformers and power distribution equipment face long waitlists, giving makers pricing power as data centers compete for supply. · Eaton CorporationIt makes switchgear, transformers and backup power systems that route electricity into and through data centers as power demand grows., Hubbell IncIt manufactures electrical components utilities need to connect data centers to the grid, benefiting from rising power infrastructure spending., Powell IndustriesIt builds custom switchgear that controls and protects electrical loads, with tight supply conditions supporting higher orders from data centers., American SuperconductorIt sells grid power equipment, representing a smaller, riskier bet that data center power demand drives broader grid infrastructure upgrades.20%
- Contractors who wire, plumb and connect data center equipment earn revenue on every project regardless of which suppliers win. · Quanta ServicesIt builds power lines, substations and grid connections for new data centers, earning revenue independent of which equipment makers win., EMCOR GroupIt installs electrical and mechanical power and cooling systems inside data centers, so growing equipment deployments drive more installation work., Comfort Systems USAIt installs cooling and mechanical systems in large buildings, with data center projects becoming an increasingly significant portion of its work., Sterling InfrastructureIt prepares land for data center campuses before equipment installation, making it an early indicator of project momentum and pipeline strength.18%
- Cash8%