Nvidia CEO Huang’s Remarks Impact Data Center Cooling Stocks
Shares of heating, ventilation, and air conditioning (HVAC) companies in the U.S. experienced a notable decline following comments from Nvidia CEO Jensen Huang. He indicated that forthcoming Nvidia chips could substantially reduce cooling requirements in data centers.
Nvidia’s Impact on Data Center Cooling Stocks
During a presentation at the Consumer Electronics Show (CES) in Las Vegas, Huang revealed that Nvidia’s next-generation chips are now in full production. The new Vera Rubin platform consists of six separate chips and is set to launch later this year.
Dramatic Predictions for Data Centers
Huang made a bold claim regarding cooling solutions, stating, “no water chillers are necessary for data centers.” This assertion has drawn attention from industry analysts, prompting Barclays’ Julian Mitchell to note that Nvidia’s influence on the AI ecosystem is significant.
Stock Market Reactions
As a result of Huang’s remarks, the stocks of several HVAC companies declined sharply:
- Johnson Controls International: down 7.5% to $112.40
- Trane Technologies: down 5.3% to $370.40
- Carrier Global: down 1.1%
- Vertiv Holdings: down 2.1%
- nVent Electric: up 0.5%
Johnson Controls and Trane Technologies are amongst the largest percentage decliners on the S&P 500. Analysts estimate that data centers contribute a low-double-digit percentage to Johnson Controls’ total sales. For Trane Technologies and Carrier Global, the percentages stand at approximately 10% and 5%, respectively.
Potential Beneficiaries
Some companies could stand to benefit from Nvidia’s advancements. nVent Electric, which is not involved in space cooling solutions, has a solid presence in data center liquid cooling technologies. Vertiv Holdings also possesses a strong historical performance in both precision air cooling and liquid cooling.
As the market navigates these changes, the implications of Nvidia’s innovation on data center cooling solutions will continue to unfold. Investors and analysts will be watching closely to see how these trends develop.
