Why data-center cooling stocks dropped fast after Nvidia CEO Jensen Huang spoke at CES - here's the breakdown

Data-center cooling stocks falling: Shares of companies that make cooling systems for data centers plunged Tuesday after Nvidia CEO Jensen Huang’s comments at the CES trade show raised concerns about future demand for their products, as per a report.

Trane, Modine, Johnson Controls, and Carrier Stocks Slide Sharply After Nvidia CEO Comments at CES

Trane Technologies Plc, known for its water-chilled cooling systems, saw its stock tumble as much as 11% in its steepest intraday drop since 2020, as per a Bloomberg report. Modine Manufacturing Co fell 21%, while Johnson Controls International Plc and Carrier Global Corp also slid amid the selloff.

Nvidia’s Rubin Chips Could Reduce Need for Traditional Chillers

Huang suggested that Nvidia’s next-generation Rubin chips can be cooled using water at temperatures that do not require traditional water chillers, the equipment that companies like Trane and Johnson Controls typically supply to data centers, as per a Bloomberg report. Bloomberg Intelligence notes that chillers are a “predominant” piece of data-center cooling equipment.


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Liquid Cooling Gains Attention Amid Market Concerns

Robert W. Baird analyst Timothy Wojs, “The comments create some questions/concerns about the longer-term positioning of chillers within data centers over time, particularly as liquid cooling becomes more prominent,” adding, "Liquid cooling allows systems to operate at higher temperatures," as quoted by Bloomberg.

While Wojs does not see a major risk to near-term estimates for cooling-system makers, he expects the remarks may “create some incremental concerns around orders, especially later in 2026,” as quoted by Bloomberg.

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AI Boom Fueled 2025 Stock Gains for Cooling Companies

The selloff comes after a year in which investors sought exposure to the AI boom by buying stocks of companies that keep racks of AI chips from overheating. Johnson Controls stock surged 52% in 2025, and Vertiv Holdings Co., which produces both cooling and power systems, rose 43%. However, weakness in the residential HVAC market weighed on other companies like Trane and Carrier.

Analysts Call Data-Center Cooling Stocks Selloff Overdone

Citi analyst Andrew Kaplowitz called the Tuesday decline “overdone,” noting that cooling-system makers have longstanding relationships with chipmakers and data-center operators. Kaplowitz pointed out that, “While we acknowledge that the Rubin comments underscore the rapid evolution of thermal management in data centers, we don’t think this is catching our companies by surprise,” as quoted by Bloomberg.

Vertiv Well-Positioned to Benefit from Liquid Cooling

Vertiv, which has a strong position in liquid cooling, may even benefit from the changes Huang discussed, according to Barclays analyst Julian Mitchell, although its chiller business could face headwinds. Vertiv’s stock fell as much as 6.8% before partially rebounding.

Nvidia’s Influence on the AI Ecosystem Cannot Be Ignored

Mitchell wrote, “Given the primacy of Nvidia to the whole AI ecosystem, one should not take their comments lightly, although they seem rather dramatic at first glance,” as quoted by Bloomberg.

FAQs

Why did cooling-system stocks drop today?

Stocks fell after Nvidia CEO Jensen Huang suggested new chips may require less traditional water-chiller cooling.

Which companies were most affected by the selloff?

Trane Technologies, Modine Manufacturing, Johnson Controls, and Carrier Global all saw notable declines.