The advent of artificial intelligence has sent demand for data centers skyrocketing, along with industrial components to keep all the AI chips from overheating. “The key for chipmakers with AI ambitions is keeping data centers cool,” Melius Research analyst Jake Levinson told CNBC. Levinson said cooling technologies manufacturers Carrier Global , Trane Technologies and Johnson Controls are all seeing higher demand for HVACs. Then there are the companies that create the infrastructure used to regulate temperature – from Parker-Hannafin’s fluid connectors to Dover’s industrial-style pumps used in liquid cooling. The stocks are up 20% 20% and 18%, respectively, year to date. PH DOV YTD mountain DOV and PH year to date Industrial experts are also watching TE Connectivity , which specializes in industrial connectors that are used to transport electric signals to the servers inside data centers. On TE’s earnings call, executives said they expect to double AI revenues to $400 million next year. Analysts at Jefferies are also bullish on the big industrials such as Caterpillar and Cummins , whose back-up power engines are sold to data center owners. For Caterpillar specifically, power generator sales were up 9% in the first quarter from the year-earlier period. While the company does not disclose data center share, Jefferies industrial analyst Stephen Volkmann estimates roughly 25% of demand is coming from data centers — growing 15%-20% year over year. “However, they [Caterpillar] are capacity constrained, which is why they are investing capex to increase large engine manufacturing capacity,” said Volkmann to CNBC. Another big player benefitting indirectly from the AI craze is recent spinout GE Vernova and its electrification segment. Growing demand for smart grid software that helps companies manage the disbursement of power has fueled GE Vernova’s electrification segment which includes grid solutions, high-voltage switchgear and transformer products. “We’re having to challenge ourselves and how we support that capacity growth,” CEO Scott Strazik told CNBC after the company posted first-quarter earnings last month. He’s also seeing similar trends with transformers and switch gears. “Those areas of the business have the most healthy growth today and over the next 90 days. I’ve got a lot of work to do with our leadership team to make sure we’ve got the capacity to serve those growth markets. And that’s one of my biggest priorities,” he said.
