The proliferation of artificial intelligence data centers is creating challenges the industry wasn’t quite ready for.
AI platforms require a reliable but controllable amount of electricity, and also need cost-effective cooling.
Although there are several specialists in this fast-growing space, one stands out among the rest.
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In the artificial intelligence (AI) industry’s infancy — when AI data centers were few in number and didn’t need to be particularly efficient — it was easy for giants like Amazon and Alphabet to take control of the cloud computing piece of the artificial intelligence business. After all, these companies were already major non-AI cloud computing service providers. Adding AI offerings to their menu of services was relatively easy.
With the AI industry continuing to refine its own technology, however, challenges linked to sheer scale and performance expectations are surfacing. As it turns out, the cloud computing industry’s familiar stalwarts aren’t necessarily best positioned to meet the industry’s newest needs.
Specialists are stepping up, translating into opportunity for investors. And one of the most promising AI cloud specialists is a relatively small company called Vertiv (NYSE: VRT). Let’s see why.
It’s not a household name. In fact, with a market capitalization of less than $100 billion, it doesn’t turn many heads in the investing world either.
Within the artificial intelligence computing community, though, Vertiv is a name you’re hearing more and more often. And for good reason. See, this company solves the problems that institutions didn’t exactly anticipate when mapping out their AI ambitions. That’s cost-effective electricity, data center cooling, and a means of managing these two surprisingly complicated aspects of the business.
An outlook from Deloitte puts things partially in perspective. The consultancy suggests that electricity consumption from AI data centers alone is poised to grow by a factor of more than 30 between last year and 2035. Even if alternatives like nuclear power and the continued proliferation of on-site solar are able keep energy costs in check, it’s still in companies’ best interest to make cost-effective use of the electricity they’re going to be consuming.
Then there’s cooling. All data center hardware generates heat. Too much heat, however, can damage computer hardware. If the world is going to be using AI even more in the future, it’s going to need to find a way of dealing with all the additional heat that’s going to be created as a result. That’s why Precedence Research believes the global data center cooling market is poised to grow at an average annualized pace of 12% between now and 2034 when it will be worth more than $200 billion per year.
