Nvidia’s CEO downplayed the need for advanced cooling systems in AI data centers, leading to stock declines for refrigeration companies. Johnson Controls, Trane Technologies, and Carrier Global saw significant losses after Nvidia’s statements at the CES trade show. Nvidia’s new Vera Rubin NVL72 system is built to work without heavy cooling, using room temperature water instead. Johnson Controls and Trane Technologies’ shares dropped over 10.7% before slightly recovering, while Carrier Global lost 2.7%.

US Stock Market Trends

In contrast, US stocks rose moderately, with the Dow Jones Industrial Average performing best. Gold outperformed stocks, and Treasury yields increased. Nvidia’s Vera Rubin system features Rubin GPUs and Vera CPUs, enhancing AI performance by up to five times compared to older models. Barclays estimates that this will significantly impact the cooling industry but expects these changes to unfold over time. Nvidia’s stock showed little movement, with a small increase of 0.2%, despite the challenges faced by cooling companies. Barclays notes that data center cooling contributes about 10% to Trane Technologies’ revenue. We recall the steep drop in cooling stocks like Johnson Controls and Trane Technologies around this time last year. This decline followed Nvidia’s CEO’s comments at the January 2025 CES trade show, where he said the new Rubin chip architecture wouldn’t need specialized cooling systems. This announcement sparked immediate fear among companies linked to data center thermal management.

Cooling Industry Outlook

After that initial panic, those stocks rebounded throughout 2025 as the market realized that the transition would be slow and complicated. In fact, the global data center liquid cooling market continued to grow aggressively, with total power consumption in data centers increasing by an estimated 10-15% last year. This indicates a strong ongoing demand for cooling solutions, even as technology advances. As we enter early January this year, we can expect heightened sensitivity on this issue. Any new announcements from chipmakers about power efficiency or thermal design could lead to similar volatility in cooling sector stocks. Traders might explore options to hedge against or speculate on sharp, short-term price fluctuations in companies like Trane Technologies and Carrier Global. The key problem is that AI’s growth produces a lot of heat, which needs to be managed, regardless of the specific chip technology. Despite efficiency improvements in 2025, the large number of new AI deployments meant demand for cooling solutions stayed strong. Therefore, a negative outlook on the entire cooling sector based on a single tech shift might be hasty. In the weeks ahead, focus should be on the implied volatility of options for these cooling companies, which surged after the 2025 event. A long straddle strategy, which profits from significant moves in either direction, could work well in this situation. This allows traders to take advantage of the market’s reaction without needing to predict the specifics of any new announcements. Create your live VT Markets account and start trading now.

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