Nvidia CEO Jensen Huang Triggers Selloff in Cooling System Stocks

The stocks of companies that make cooling systems dropped sharply on Tuesday after comments from chipmaker Nvidia’s (NVDA) CEO, Jensen Huang, raised worries about the future demand from data centers. More precisely, Huang said that Nvidia’s upcoming Rubin chips could be cooled with water at higher temperatures, which may eliminate the need for water chillers. Analysts said that these remarks raised longer-term questions about the role of chillers in data centers as liquid cooling becomes more common.

As a result, Trane Technologies (TT) shares fell as much as 11% in their worst intraday decline since 2020, while Modine Manufacturing (MOD) plunged as much as 21%. Johnson Controls (JCI) and Carrier Global (CARR) also declined, as investors reacted quickly to the possibility that newer chip designs may reduce the need for some traditional cooling equipment. The reaction comes after a strong year for many cooling and data center equipment stocks, driven by investor interest in the AI boom.

Johnson Controls rose 52% in 2025, while Vertiv Holdings (VRT) gained 43%, although weaker residential HVAC demand weighed on Trane and Carrier. However, some analysts argued that Tuesday’s selloff went too far. Citi’s (C) five-star analyst, Andrew Kaplowitz, said that cooling companies work closely with chipmakers and data center operators and are not being caught off guard by new technology. Meanwhile, Barclays (BCS) five-star-rated Julian Mitchell added that while Nvidia’s comments should be taken seriously, Vertiv’s strong position in liquid cooling could help offset pressure on its chiller business.

Which Stock Is the Better Buy?

Overall, out of the stocks mentioned above, analysts think that MOD stock has the most room to run. In fact, MOD’s average price target of $186.60 per share implies more than 46% upside potential.

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