A company involved in a $4.75 billion data center cooling deal has stated that demand for its services will continue to grow even if the pace of artificial intelligence infrastructure construction slows down.
Josh Magnusson, Global Water Solutions General Manager at Ecolab, said the company anticipates its data center business revenue will maintain an annual growth rate of at least 20% for the "foreseeable future." He attributed this to continuously rising computational power demands and the necessity for older data centers to undergo retrofitting and upgrades to meet the requirements of new-generation chips. Ecolab agreed last week to acquire Cool Cold Systems from a fund managed by KKR.
The AI boom has driven massive infrastructure investments, pushing the valuations of some technology companies into the trillions of dollars. Despite ongoing technological advancements and acceptance by both businesses and consumers, the return on investment for these technologies remains unclear.
"Whether there is an AI bubble or not, I think it's irrelevant," Magnusson stated in an interview. "Whether the AI bubble bursts, or lots of smaller bubbles burst, the overall demand curve will continue to move upward."
Ecolab, with a market capitalization of $74 billion, provides water optimization services to clients across multiple industries, with its data center business being the fastest-growing segment. The acquisition of Cool Cold Systems represents the company's largest deal in over a decade. The purchase price is more than 17 times the cost KKR paid to acquire the company three years ago, a premium that underscores the surging demand for data center cooling systems.
Headquartered in St. Paul, Minnesota, Ecolab is focused on becoming a global leader in liquid cooling technology. This technology is more energy-efficient and is gradually replacing air-cooling systems as the mainstream solution for data centers. Currently, only about 5% of data centers utilize liquid cooling, but Magnusson predicts this proportion will increase significantly over the next decade because new-generation chips have higher power demands that traditional air-cooling methods cannot adequately address.
Ecolab believes that by combining its own water treatment services with Cool Cold Systems' technologies—such as cooling distribution units, cold plates, and direct-to-chip cooling—it can capture a larger share of data center-related expenditures. Beyond new construction projects, cooling demand will also be driven by the retrofitting of existing data centers, as well as the conversion of sites like cryptocurrency mining farms and old steel plants into data centers.
This acquisition is just the latest in a recent series of transactions involving data center infrastructure, particularly in the liquid cooling sector. Another company specializing in liquid cooling, Anwei Electric, stated last week that it plans to pursue "larger add-on acquisitions" to further accelerate its business growth.