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AI Boom Boosts Power and Cooling Equipment Businesses, Tapping into $7 Trillion Data Center Investment
The AI wave is creating new winners in the supply chain, particularly among manufacturers of electrical and cooling systems. McKinsey forecasts that global data center investment will reach nearly $7 trillion by 2030. Meanwhile, Nvidia indicates that AI spending is likely to remain strong for several more years. Major transformer makers such as South Korea's HD Hyundai Electric and China's Hainan Jinpan Smart Technology report significantly increased demand. HD Hyundai Electric's backlog rose 23% to $8.5 billion, while Jinpan saw new orders from data center businesses more than quadruple. Bank of America expects liquid cooling to account for 70% of installations in new AI data centers by 2030, up from about 30% today. McKinsey estimates that this technology can reduce energy consumption by over 27%. However, shares of many suppliers are starting to cool off as investors question elevated valuations amid intensifying competition. Bank of America warns that not all companies in the supply chain will be winners.