LinkedInAI Cooling Beneficiaries Plunge on NVIDIA Comment
On June 6, Modine Manufacturing Co (MOD) shares plunged 7.44% to close at $129.97 on the New York Stock Exchange. Intraday volatility peaked as the stock fell over 20% at one point, erasing roughly $470 million in market capitalization. Once viewed as a prime beneficiary of expanding AI data-center investment, Modine saw investor sentiment shaken by a single remark about NVIDIA’s next-generation platform.
Fear Triggered by “Data Centers That Don’t Use Water Chillers”
At CES, NVIDIA CEO Jensen Huang stated that the upcoming “Rubin” system will “eliminate the need for water chillers in data centers.” The comment sparked fears of reduced demand for water-based cooling solutions. As a result, suppliers of data-center cooling—Modine Manufacturing Co (MOD), Johnson Controls International (JCI), and Trane Technologies (TT)—all experienced share-price declines, reflecting a market reaction to a potentially contracting water-chiller market.
Growth Story Intact…Cooling Paradigm Shift Is the Key Variable
Despite the sell-off, analysts point out that Rubin won’t be commercially available until the second half of 2026, leaving years of design and validation ahead. With rack densities rising, investment in cooling remains critical. Under its Airedale by Modine brand, Modine has diversified into high-efficiency chillers, air-handling units, and next-generation immersion and liquid-cooling solutions. In its most recent quarter, data-center revenue grew by over 40% year-over-year. The company has also announced a $100 million investment to expand North American data-center capacity and aims to boost data-center sales to $2 billion by fiscal 2028.
Tug-of-War: AI Infrastructure Momentum vs. Cooling Paradigm Shift
The recent decline highlights Modine’s exposure to debates over cooling-technology transitions. Even if data-center spending continues to rise, a shift toward air-cooled systems, direct-to-chip cooling, or new liquid-cooling architectures could require Modine to adjust its legacy equipment-centric growth story. Conversely, a successful pivot into liquid cooling and modular data centers could transform the current pullback into a healthy “breather,” easing valuation pressures. Over the next one to two years, the mix of technologies and products Modine adopts to ride the AI-infrastructure wave will determine whether this 7% drop is a temporary correction or the start of a structural reevaluation.
