Nvidia (NVDA) CEO Jensen Huang frightened investors in cooling technologies on Tuesday after dismissing the need for them in data centers running on the semiconductor’s newest AI chip system. Speaking at the annual CES trade show in Las Vegas, Huang said that Nvidia’s new Vera Rubin NVL72 rack-scale system optimizes for heating needs and can be cooled with room-temperature water without the need for chilling systems.
This announcement sent refrigeration stocks reeling. Johnson Controls International (JCI) and Trane Technologies (TT) dropped as much as 10.7% on Tuesday morning before recovering slightly. Carrier Global (CARR) also sold off abruptly before rising to a loss of 2.7% after Barclays said that data centers only accounted for about 5% of sales.
US stock indices are up moderately near 11:00 am EST in New York with the Dow Jones Industrial Average (DJIA) leading its counterparts. Gold has risen better than equities, while US Treasuries saw their yields jump across the curve.
Nvidia’s Huang says Vera Rubin racks don’t require water chillers
CEO Huang introduced Nvidia’s new Rubin offering, which consists of Rubin GPUs and Vera CPUs combined in rack systems that he said should optimize for better AI performance. Nvidia claims the new servers offer three to five times the inference and AI model processing speeds of the predecessor Blackwell model.
“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,” Barclays analyst Julian Mitchell wrote in a client note.
Mitchell noted that Johnson Controls’ business stands to be greatly affected by the new technology, though its impact could take multiple years to be felt. Mitchell estimates that data center cooling make up about 10% of Trane Technologies’ business.
Despite the major impact on the cooling company’s share prices, Nvidia stock barely budged, rising 0.2% at the time of writing.
