Data center power and cooling

How does data center cooling work?

Data center cooling removes the heat that servers generate so the chips stay within safe operating limits. Traditional facilities used air cooling: computer room air handlers push cold air across racks and exhaust the hot air out. That worked when a rack drew a few kilowatts. AI training racks are far denser (an NVL72-class rack can pull 100kW or more), and air alone can no longer carry that much heat away, so operators move to liquid cooling and direct-to-chip cold plates that run coolant straight across the processors, plus rear-door heat exchangers and immersion in some designs.

This shift is the core mechanism behind the data center cooling side of the theme. Vertiv (VRT) sells exactly this stack: liquid cooling units, coolant distribution, high-density power distribution, and integrated thermal management built for AI rack densities, which is why its product mix tracks the move from air to liquid so closely. Corning (GLW) benefits on an adjacent axis, because denser, hotter campuses still need high-count optical fiber to interconnect all those racks. The simple rule of thumb: the more power a rack draws, the more the data center cooling problem shifts from air to liquid, and the more equipment the named beneficiaries supply per megawatt built.

How does data center power flow from the AI chip to the grid?

Data center power is a chain that runs from the utility grid all the way down to the processor. A hyperscaler campus connects to high-voltage transmission, steps voltage down through substations and switchgear, distributes it through busways and power distribution units inside the building, and finally feeds the racks through uninterruptible power supplies that smooth out any interruption. Every link in that chain has to scale up together when an AI campus is sized in the hundreds of megawatts or gigawatts rather than the tens.

That is where the contractors and equipment makers in the data center power and cooling theme come in. Quanta (PWR) builds the transmission lines and substations that utilities add to serve new AI load. Comfort Systems (FIX) and EMCOR (EME) do the mechanical, electrical, and plumbing work inside the buildings, wiring the power and cooling systems together. Sterling (STRL) prepares the site itself: earthwork, foundations, and utility tie-ins before any equipment arrives. WESCO (WCC) distributes the wire, cable, switchgear, and busways those crews install. Each one earns revenue per facility built, so a faster data center power buildout flows directly into their backlogs.

Why do AI data centers need so much more power than traditional ones?

AI workloads concentrate enormous compute into a small footprint. A conventional CPU server rack might draw a handful of kilowatts, while AI accelerator racks pack many high-power GPUs together and draw many times more, often an order of magnitude higher per rack. Multiply that across thousands of racks in a single campus and the result is data center power demand measured in hundreds of megawatts or full gigawatts, comparable to a small city. Because the chips run hot and constantly during training, the load is also dense and sustained rather than intermittent.

This demand does not stay inside the building. To serve a new gigawatt-scale campus, a utility often has to build fresh transmission, add substation capacity, or contract new generation, which lifts utility capital spending and the contracting work that supports it. That is the structural link from AI compute to the data center power and cooling theme: the chips create the load, the load forces grid and on-site upgrades, and the contractors (PWR, FIX, EME, STRL) and distributors (WCC) get paid to build them. Vertiv (VRT) sits at the rack end of the same chain, supplying the power and cooling gear that turns delivered electricity into a safe, dense computing environment.

How does data center power and cooling work as a single buildout?

On a real AI campus, data center power and cooling are designed and constructed together, not as separate projects. A developer secures land and grid access, a contractor like Sterling (STRL) prepares the site, utilities and specialists like Quanta (PWR) bring in transmission and substations, and MEP contractors like Comfort Systems (FIX) and EMCOR (EME) install the electrical distribution and the cooling loops in one coordinated build. WESCO (WCC) supplies the electrical materials throughout, and Vertiv (VRT) provides the integrated power and cooling equipment that lands in the data hall.

Framing it this way shows why the data center power and cooling theme spans several stock types rather than one. No single company covers the full stack from grid to chip, so each named beneficiary captures a different slice of the same campus budget. Industrial gas suppliers Linde (LIN) and Air Products (APD) sit one step upstream, supplying the specialty gases used in the fabs that make AI accelerators, which is why they appear as adjacent exposure rather than direct construction beneficiaries.

What gets a stock into the Data center power and cooling theme?

Hardware, contracting, or materials that scale directly with AI data center buildouts: power and cooling equipment, electrical infrastructure construction, MEP contracting, site development, optical fiber, industrial gases at hyperscale fabs and DCs.

Data center power and cooling stocks

Every public name that fits the Data center power and cooling thesis, with the rationale for inclusion. Click any ticker for the full stock guide. The basket above starts equal-weighted; you set your own target weights inside Walnut.

How to invest in Data center power and cooling

There are a few practical ways to get exposure to data center power and cooling. The most concentrated is a small pair of leaders, for example Vertiv (VRT) for rack-level power and cooling equipment alongside Quanta (PWR) for the transmission and contracting side. That is simple to hold, but the two names tend to move together and leave out the rest of the build. If you prefer something passive, the closest ETF proxies in 2026 are XLU (utilities) and XLI (industrials), and both are diluted: they hold their data center beneficiaries at small weights inside hundreds of unrelated names, so neither is a clean expression of the theme. No pure-play data center power and cooling ETF exists yet, because index providers have not defined a tight enough rule set around it.

The alternative is to build a data center power and cooling basket in Walnut. You describe the theme to Walnut's AI assistant (for instance, "data center power and cooling beneficiaries"), and it proposes constituents and starting weights spanning equipment (VRT), grid and contracting (PWR, FIX, EME, STRL), distribution (WCC), and adjacent industrial gases (LIN, APD) and fiber (GLW). You review the rationale, adjust the weights, and fund the basket through your existing connected broker. Walnut never trades for you: you approve every order before it is placed, and the data center power and cooling basket then tracks as a single performance line you can compare against XLU or XLI.

ETFs used as passive proxies for Data center power and cooling

If you want the theme as a single ticker rather than as a basket, these are the ETFs people most commonly use. Each has trade-offs (concentration, expense ratio, sector overlap) covered in the individual ETF guides.

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