AI needs to keep cool—literally. That's driving demand for these infrastructure companies

🌈 Abstract

The article discusses the increasing demand for infrastructure companies that provide cooling solutions for data centers and AI-powered systems.

🙋 Q&A

[01] Investing trends: AI needs to keep cool

1. What is driving the demand for infrastructure companies that provide cooling solutions?

• The advent of artificial intelligence has skyrocketed demand for data centers and industrial components to keep all the AI chips from overheating.
• Cooling technologies manufacturers like Carrier Global, Trane Technologies, and Johnson Controls are seeing higher demand for HVAC systems.
• Companies that create infrastructure to regulate temperature, such as Parker-Hannafin's fluid connectors and Dover's industrial-style pumps used in liquid cooling, are also seeing increased demand.

2. Which other companies are benefiting from the AI craze indirectly?

• TE Connectivity, which specializes in industrial connectors that transport electric signals to the servers inside data centers, expects to double its AI revenues to $400 million next year.
• Caterpillar and Cummins, whose backup power engines are sold to data center owners, are also seeing increased demand.
• GE Vernova's electrification segment, which includes grid solutions, high-voltage switchgear, and transformer products, is experiencing growing demand for smart grid software that helps companies manage the disbursement of power.

[02] GE Vernova's growth in smart grid technology

1. What is driving the growth in GE Vernova's electrification segment?

• Growing demand for smart grid software that helps companies manage the disbursement of power has fueled GE Vernova's electrification segment.
• GE Vernova's CEO, Scott Strazik, is seeing similar trends with transformers and switch gears, which have the "most healthy growth" and are a priority for the company to ensure they have the capacity to serve these growth markets.