Shares of Vertiv (VRT 2.14%), which makes infrastructure for cooling and power systems for data centers, were heading lower today on reports that Amazon could be challenging the company in cooling technology.
As of 11:39 a.m. ET, the stock was down 7.3% on the news.
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Vertiv faces new competition
Vertiv has been a big winner from the data center boom so it's not surprising to see Amazon trying to muscle in on its territory.
In a blog post yesterday, Amazon touted an advance in liquid cooling for its P6e-GB200 Ultra Servers, an improvement from previous air cooling. That technique allows for higher compute density, which will make it easier for its customers to get up and running with Nvidia Blackwell GPUs on Amazon Web Services (AWS).
Last month, Amazon announced it had developed a new custom liquid cooling system in just 11 months, and it now seems to be deploying that technology as yesterday's announcement indicates.
Amazon also said that the company had considered multiple liquid cooling solutions from other vendors, but realized they weren't a good fit for AWS. That was not a direct comment on Vertiv, but investors may be interpreting it that way. It's unclear if Amazon plans to sell the technology, but just using it for AWS would be enough to make waves in the data center market. AWS is still the biggest cloud infrastructure provider, meaning it has the greatest demand for computing power.
What it means for Vertiv
The implication for Vertiv isn't clear at this point, but the stock is up roughly 10 times from where it was in 2022 before the artificial intelligence (AI) boom started.
It's been seen as one of the most direct winners from AI, and is seeing strong growth with 25% organic net sales growth in the first quarter. For the near term, Vertiv's prospects look solid, but Amazon could look to challenge it in other ways as well, which could present greater problems for the growth story.
