Shares of data-center cooling and HVAC equipment makers came under sharp pressure after comments from Nvidia’s chief executive at the CES technology conference triggered fresh doubts about long-term demand for traditional cooling systems. The selloff underscores how tightly investor sentiment around AI infrastructure has become linked to Nvidia’s technology roadmap — and how quickly markets can reassess adjacent beneficiaries when assumptions shift.

Nvidia’s CES Remarks Jolt Infrastructure Expectations

The catalyst for the move came when Nvidia CEO Jensen Huang said that the company’s next-generation Rubin chips can be cooled using higher-temperature water that may not require traditional water chillers. That comment reverberated across markets, as chillers represent a core component of cooling systems supplied to hyperscale data centers by firms such as Johnson Controls, Trane Technologies, Carrier Global, and Modine Manufacturing.

Johnson Controls shares fell as much as 11%, marking their steepest intraday drop since 2022, while Modine slid more than 20% at its lows before stabilizing. Trane and Carrier also posted notable declines. For investors who had piled into the broader “AI picks-and-shovels” trade over the past year, the comments raised concerns that parts of the cooling value chain could face structural headwinds as liquid cooling technologies evolve.

From AI Euphoria to Technology Risk Reassessment

Cooling-system stocks were among the strongest performers in 2025, benefiting from aggressive capital spending by cloud providers racing to deploy AI compute capacity. Johnson Controls surged more than 50% last year, while Vertiv — which provides both power and thermal solutions — gained over 40%. Those gains were driven by expectations that denser AI racks would require increasingly sophisticated cooling infrastructure.

Huang’s remarks did not negate the need for cooling altogether, but they did challenge assumptions about the type of equipment that will dominate future data centers. Liquid cooling allows chips to operate at higher temperatures, potentially reducing reliance on chillers over time. For equity markets, that nuance mattered: investors began to question whether order growth beyond 2026 could slow, even if near-term demand remains intact.

Analysts Push Back Against Panic Selling

Several analysts cautioned that the market reaction may have gone too far. While acknowledging the rapid pace of innovation in thermal management, some argued that cooling suppliers are not being blindsided by these developments. Many already invest heavily in liquid cooling solutions and maintain close relationships with chipmakers and data-center operators.

Vertiv, for example, is widely seen as well positioned to benefit from a shift toward liquid cooling, even if parts of its chiller business face pressure. More broadly, cooling requirements are still expected to grow as AI workloads expand, even if the technology mix evolves. From this perspective, the selloff reflects valuation compression rather than a collapse in end-market demand.

Implications for Asia and Global Supply Chains

For Asian markets, the episode carries broader significance. Much of the global data-center supply chain — from precision manufacturing to component sourcing — runs through Asia. Any reallocation of capital spending away from certain cooling technologies could ripple through suppliers in Japan, South Korea, Taiwan, and China, particularly those tied to industrial equipment and thermal components.

At the same time, the rally in data-storage stocks following Huang’s CES comments highlights how selective the AI trade has become. Investors are no longer buying the entire ecosystem indiscriminately; instead, they are rotating toward segments perceived as most directly aligned with Nvidia’s roadmap.

What to Watch Going Forward

The next phase of the AI infrastructure trade is likely to be defined less by blanket optimism and more by technological differentiation. Cooling remains essential, but how it is delivered — and who captures the value — is becoming a more nuanced question. Earnings guidance, order backlogs, and evidence of successful transitions into liquid cooling will be critical in determining whether recent stock declines represent a buying opportunity or an early signal of longer-term disruption.