A technology release at CES 2026 directly exposed the vulnerabilities in the entire data center cooling industry chain. The CEO of a major chip giant announced that the new Rubin chip servers no longer need to rely on traditional water cooling systems to control temperature. As soon as this statement was made, the capital market instantly exploded.

Share prices plummeted accordingly. Moding Manufacturing, a company specializing in thermal management solutions, dropped over 13% in a single day. Johnson Controls and Trane Technologies also fell more than 7%, and Vertiv Technologies was not spared, dropping 3%. These are all players with deep roots in the liquid cooling field for data centers. Moding Manufacturing’s liquid cooling and data center business revenue now accounts for over one-third of the company’s total, serving as a core growth driver. The sharp decline in stock prices directly reflects market concerns—these companies’ core growth engines may be slowing down.

Looking back, the entire logic chain of the liquid cooling sector was quite clear: explosive growth in AI computing power → soaring energy consumption → the need for more robust cooling solutions. AI model parameters increase tenfold each year, chip power consumption repeatedly hits new ceilings, and liquid cooling technology, with its high heat dissipation efficiency, is widely regarded as a necessity. In China, the liquid cooling market for intelligent computing centers reached 18.4 billion yuan in 2024, and institutions forecast it could reach 130 billion yuan by 2029. The outlook seemed very promising.

However, this recent statement actually points to a shift in the industry’s underlying logic: if the speed of chip energy efficiency improvements can outpace the growth of energy consumption, the necessity of traditional water cooling will significantly diminish. In fact, the new chip adopts an extreme collaborative design, utilizing MLCP microchannel liquid cooling plates, integrating chip and heat dissipation to achieve temperature control. In simple terms, it’s about improving chip efficiency at the source, rather than relying on bulky external cooling systems as a remedy.

What does this logical shift imply? Traditional water cooling companies may need to rethink their competitive moat. If energy efficiency becomes the key factor, companies that solely produce cooling hardware will face shrinking opportunities. The market’s concern is not that liquid cooling technology itself is failing, but that it may no longer be a “must-have” option, but rather an “alternative.” For investment logic built on the assumption of necessity, this is undoubtedly a fatal blow.