Tech companies have been capitalizing on the boom in artificial intelligence, driving the development of products and services in the field. It also means that AI data centers are growing rapidly—and so is the demand for them. Data centers have the massive computing power required for artificial intelligence workloads. This, in turn, will drive demand for data center cooling systems. Jefferies said in a report on September 10: “The popularity of artificial intelligence has made heat dissipation attractive. We believe that driven by the continuous iteration of artificial intelligence chips and rising heat dissipation requirements, artificial intelligence data centers will have a strong demand for liquids.” The demand for cooling should continue for the next 5-10 years. Cooling services are said to improve the energy efficiency of data centers, thereby improving cost efficiency. Taking this cost efficiency into account, Jefferies estimates that the total potential market for liquid cooling will increase from 2023 to 2023. US$997 million to US$27.8 billion in 2030. Jeffries said that in China, the development of liquid cooling has “fallen behind.” But it expects two factors to drive growth this year and next. The first is that the Chinese government has established stricter electricity efficiency requirements. Secondly, according to investment banks, Chinese digital communications giant Huawei’s graphics processing unit production capacity will more than double in 2025 and 2026. Capital spending by cloud solution providers in China should also recover, Jeffries said. Jefferies said this will result in a 13% compound annual growth rate for the total addressable market for data center cooling solutions between 2023 and 2030. Stock Picks Jefferies names three stocks with a global Buy rating that will benefit from the cooling trend and more in the data center space. Schneider Electric: Jefferies said it expected the French company to be the “biggest beneficiary” of demand driven by artificial intelligence or data centers among all European companies in the sector. “Given its comprehensive product portfolio, benefiting from demand for a variety of products in this space, we believe Schneider’s data center business should grow significantly from these levels,” Jeffries wrote. He added that the company has data center ” One of the most comprehensive products, Center Space. Envicool Technology: Jefferies expects data center cooling sales in Southeast Asia to account for a third of the Chinese company’s sales. The company’s earnings per share are expected to grow 56%, up from 42% previously. Megmeet Electric: Jefferies noted that Megmeet is one of four qualified power supply suppliers for Nvidia servers, adding that the Chinese company is expected to receive PSUs for Nvidia servers by the end of 2024. units) orders, with deliveries starting in 2025. —CNBC’s Michael Bloom contributed to this report.
Jefferies specifies stocks to buy on demand for artificial intelligence data centers | Real Time Headlines
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