Jan 6 (Reuters) – Shares of U.S. heating, ventilation and air conditioning-related companies fell on Tuesday after Nvidia Chief Executive Jensen Huang said the company’s upcoming chips could significantly reduce data center cooling needs.
Johnson Controls International fell 7.5% to $112.40; Trane Technologies fell 5.3% to $370.40. Both stocks hit multi-month lows and were among the S&P 500’s biggest decliners.
Speaking at the Consumer Electronics Show (CES) in Las Vegas on Monday, Huang said Nvidia’s next-generation chips are in “full production.” The Vera Rubin platform consists of six independent Nvidia chips and is expected to debut later this year.
When it comes to cooling requirements, Huang said “data centers don’t need chillers.”
“Given Nvidia’s primacy in the overall AI ecosystem, one should not take their comments lightly, although they may seem quite compelling at first glance,” Barclays analysts said in a report led by Julian Mitchell.
Companies most affected include Johnson Controls International Inc., Trane Technologies Inc. and Carrier Global Inc., analysts said.
They estimate that data centers account for only a double-digit percentage of Johnson Controls’ total sales, while data centers account for about 10% and 5% of global sales for Trane Technologies and Carrier, respectively.
Carrier Global shares fell 1.1%.
The analyst also highlighted that nVent Electric could benefit from these developments as it has “no business in the space cooling/chiller/air handling space” but has a “good position in the data center liquid cooling space.”
Data center power equipment maker Vertiv Holdings could also benefit from its “strong historical position in precision air cooling” and “strong position in liquid cooling,” analysts said.
Vertiv shares fell 2.1%, while nVent shares edged up 0.5%.
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Alan Barona)
