Key Points
Nvidia's next-generation AI infrastructure operates in a way that could potentially drive demand for Johnson Controls' products.
Data centers' infrastructure is not Johnson Controls' core business, but it is a fast-growing area, and investors have high hopes for it.
The words of Nvidia CEO Jensen Huang matter, and the implications of what he said at the CES 2026 trade show had an impact on stocks like Johnson Controls (NYSE: JCI). The heating, ventilation, and air conditioning (HVAC) company's stock was down by as much as 10% in early morning trading as the market digested Huang's comments.
Jensen Huang's presentation
When discussing Nvidia's next-generation of AI infrastructure, called Vera Rubin, Huang noted that the new systems would use warm water cooling.
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In fact, the matter was discussed the previous day in an Nvidia technical blog post, "Traditional data centers heavily rely on air cooling, which consumes significant energy to move and condition air. Vera Rubin NVL72 systems instead use warm-water, single-phase direct liquid cooling (DLC) with a 45-degree Celsius supply temperature."
What it means to Johnson Controls
That's great news for energy efficiency, but it's not great news for companies like Johnson Controls and Trane, which provide chillers and refrigeration solutions to keep data centers and, ultimately, servers cool. While data center-related revenue is likely responsible for a mid-teens percentage of Johnson Controls' revenue, it serves as a growth engine for the company. Consequently, today's sell-off in the stock and that of its peers like Trane is understandable.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Johnson Controls International and Nvidia. The Motley Fool has a disclosure policy.
