This niche AI play is seeing business growth rates that are triple the pace of the data centers

This niche AI play is seeing business growth rates that are triple the pace of the data centers


A large hallway with supercomputers inside a server room data center.

Luza Studios | E+ | Getty Images

As artificial intelligence fuels the boom in data center growth, investors are eyeing a new frontier: the companies keeping these digital powerhouses cool.

nVent Electric, Vertiv and Modine Manufacturing have seen their stocks soar in 2024, buoyed by partnerships with tech giants investing billions in AI infrastructure. Despite the gains, Wall Street believes these cooling leaders have room to run as the fast-growing data center market they serve desperately requires liquid cooling to operate effectively.

Shares of nVent are up 23% this year, while Vertiv and Modine have rallied 133% and 125%, respectively in 2024. Yet there’s been a lot of volatility in stocks with exposure to data centers. All three names experienced massive drawdowns that coincided with Nvidia’s sell-off on Sept. 3 — when the AI darling tumbled 10% in a single session — creating a buying opportunity, according to many analysts.

That’s because historically, data centers used air cooling to manage the heat generated by traditional cloud applications. But as the AI boom continues using new chips like Nvidia’s graphics processing units to train AI models, they’re generating high density computing power, consuming far more energy, and producing more heat in the process. This shift is forcing data center operators to rethink their cooling strategies to help servers run at peak efficiency, and liquid cooling is emerging as the method of choice given it’s 25 times more effective than air-cooling.

“The reality is data centers cannot run AI processing in any capacity without using liquid cooling,” said Dean Dray, analyst at RBC Capital Markets to CNBC. “The thermal dynamics of the heat generation in the chips have reached the stage where legacy air conditioning is no longer powerful enough for the concentrated heat that gets created.”

Triple data center growth

A liquid cooling pioneer

A strong backlog of business

A newcomer to the space



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