![Nvidia GPU Cooling Is a $4.8 Billion Opportunity](https://news7g.com/wp-content/uploads/2024/07/107432156-1719229026146-gettyimages-2158430417-raa-nvidiast240623_np0JD-780x470.jpeg)
The cooling system required for Nvidia’s GPU server racks in data centers will create a $4.8 billion market by 2027, according to Morgan Stanley. Liquid cooling is a solution to “power shortage pressures” in data centers, the bank said in a July 30 report. “We believe NVDA’s GB200 liquid cooling solution for data centers could generate $4.8 billion [total addressable market] by 2027,” the company said. By increasing thermal design capacity and more, such liquid-cooling systems save 10% to 15% on capital costs, according to Morgan Stanley. The total cost of a liquid-cooling system is $82,460 per rack for Nvidia’s GB200 GPU server—15 to 20 times higher than an air-cooling system for the company’s H100 GPU racks. Nvidia’s GPUs dominate the market and power most generative artificial intelligence tools. “Knowledge of heat flow, precision requirements, and time to market are key winning factors in this space,” Morgan Stanley analysts said. Stock picks Companies that could benefit include suppliers with “proven track records of delivery,” among other factors, they added. Names include facility providersdata center giant Vertiv, Schneider Electric, Taiwanese company AVC, and electronics manufacturer Delta Electronics. Among those names, Delta is Morgan Stanley’s top pick. The firm said it likes Taiwanese company Delta because it believes its liquid cooling solution will add $280 million to AI cooling revenue in 2025. “We like their integrated solution for both power and cooling for data centers. We believe this is the most efficient design for hyperscalers and data center operators, as it aims to reduce total cost of ownership while meeting PUE requirements,” the bank’s analysts wrote. PUE is a measure of the efficiency of power consumption in data centers. Morgan Stanley raised its price target on the stock from 400 to 488 New Taiwan dollars ($12.20 to $14.90), implying upside potential of about 26%. The bank is also bullish on AVC, which it says is “well positioned” to supply a wide range of air and liquid cooling products for AI servers. The bank notes that AVC has been selected as Nvidia’s primary GB200 cold plate partner, referring to a component that removes heat using liquid cooling technology. “Our supply chain checks indicate that AVC is the reference design for the cold plate for NVIDIA’s GB200 server rack liquid cooling system,” the bank added. Morgan Stanley expects AVC to launch its first shipment in the third quarter of this year and capture 30% of the shipment supply market by 2025. The bank raised its price target for AVC to NT$830 from NT$520 — a 60% increase. That implies about 35% upside potential. — CNBC’s Michael Bloom contributed to this report.