Morgan Stanley estimates GPU cooling infrastructure represents a $4.8 billion market opportunity.
Morgan Stanley has identified Nvidia's GPU cooling requirements as a significant market opportunity, projecting a $4.8 billion addressable market by 2027. According to the bank's July 30 report, liquid cooling systems are critical solutions to address "power shortage pressures" in data centers. These systems offer substantial cost benefits, saving between 10% and 15% on capital expenditure compared to traditional air-cooling approaches. The cost of a liquid cooling system for Nvidia's GB200 GPU server is $82,460 per rack—approximately 15 to 20 times higher than an air-cooling system for its H100 GPU rack.
Morgan Stanley analysts emphasized that "heat flow knowhow, precision requirements and time-to-market delivery are key winning factors in this space." The bank identified several companies positioned to benefit from this market growth, including data center facility vendors Vertiv, Schneider Electric, Taiwanese firm AVC, and electronics manufacturing company Delta Electronics. Among these, Delta Electronics emerged as Morgan Stanley's top pick, with the bank expecting its liquid cooling solutions to generate an additional $280 million in AI cooling revenue in 2025. The bank raised its price target for Delta from 400 to 488 New Taiwan dollars ($12.20 to $14.90), representing potential upside of around 26%.
Morgan Stanley is also positive on AVC, which the bank says is "well positioned" to offer various air and liquid cooling products to AI servers. AVC has been selected as a major GB200 cold plate partner of Nvidia, a component that removes heat using liquid cooling technology. According to Morgan Stanley's supply chain checks, "AVC is the reference design for cold plate for NVIDIA's GB200 server rack liquid cooling system." The bank expects AVC to roll out its first batch of shipments in the third quarter and to capture 30% of the supply share for shipments in 2025. Morgan Stanley raised its price target for AVC from NT$520 to NT$830—a 60% increase—implying potential upside of around 35%. The bank highlighted AVC's advantages, noting it "likes its integrated solution for both power and cooling offerings for data centers" and believes "it offers the most effective design to hyperscalers and data center operators, as it aims to lower the total cost of ownership while meeting PUE requirements."