Investing in Water-Efficient AI Infrastructure: A Growing Market Amid a Looming Crisis

The exponential growth of artificial intelligence (AI) has ushered in a new era of technological innovation, but it has also exposed a critical vulnerability: water scarcity. As AI-driven data centers expand to meet global demand, their voracious thirst for water is straining already stressed ecosystems. A single 100-megawatt data center consumes 2 million liters of water daily-equivalent to 6,500 households-while global water usage by data centers is projected to double to 1.2 trillion liters annually by 2030, according to an EthicalGeo study. This crisis is not just environmental; it's a financial risk. Companies operating in water-stressed regions face regulatory scrutiny, reputational damage, and operational disruptions. Yet, this challenge also creates an opportunity: investors who target water-efficient cooling technologies stand to profit from a market expected to grow at a 25.9% CAGR through 2029, according to a data center liquid cooling report.

The Water Crisis in AI Infrastructure

AI's computational intensity demands advanced cooling systems, which in turn require vast amounts of water. Evaporative cooling, the most common method, uses potable water to prevent equipment damage from impurities, with 80% of the water lost to evaporation, according to a Bloomberg analysis. Google's data centers alone consumed 29 billion liters in 2023, while Microsoft's Azure and OpenAI operations saw a 34% spike in water use in 2022, per an AIDrinksWater report. Academic projections warn that AI could push global data center water consumption to 4.2–6.6 trillion liters annually by 2027, based on a scenario-based forecast. In regions like Chile and the U.S. Southwest, where data centers compete with agriculture and communities for water, protests and regulatory backlash are already emerging, as reported by the Los Angeles Times.

The Rise of Water-Efficient Cooling Technologies

The market for sustainable cooling solutions is booming. Liquid cooling, which uses direct-to-chip or immersion cooling to minimize water and energy use, is gaining traction. The global data center liquid cooling market, valued at $5.1 billion in 2025, is projected to reach $12.79 billion by 2029, according to the same data center liquid cooling report. Key players like Vertiv Group Corp. and Schneider Electric are leading the charge, while innovators such as CoolIT Systems and LiquidStack are disrupting traditional models with modular, high-efficiency solutions.

Financial Analysis of Key Players

To identify undervalued equities, we examine financial metrics from Q3 2025:

1. Vertiv Group Corp. (VRTX):
2. Revenue Growth: 35.1% YoY in Q2 2025, with $2.64 billion in revenue, according to the MarketBeat earnings page.
3. P/E Ratio: Trailing P/E of 61.10, forward P/E of 35.57, per MarketBeat.

4. Outlook: Earnings are projected to grow 24.23% in 2026, based on MarketBeat's outlook. Despite its high P/E, Vertiv's dominance in direct liquid cooling and strategic acquisitions (e.g., Airedale Munters) position it as a long-term play.

5. Schneider Electric (SBGSY):

6. Revenue Growth: 8% organic growth in Q2 2025, with €10 billion in revenue, according to Schneider's quarterly results.
7. P/E Ratio: 32.30 trailing, 22.99 forward, per financecharts.

8. Outlook: Strong performance in Energy Management and double-digit growth in North America suggest undervaluation relative to its 18.2% EBITA margin, according to those quarterly results.

9. CoolIT Systems:

10. Revenue: $164.6 million in 2025, per CompWorth.
11. Valuation: Acquired by KKR and Mubadala in 2023 at $270 million, according to CB Insights.

12. Outlook: No public P/E ratio, but its focus on AI-specific cooling and 20% employee growth indicate strong scalability, as described in a CoolIT press release.

13. LiquidStack:

14. Revenue: $5.3 million in 2023, according to a GetLatka profile.
15. Valuation: Private, with no disclosed metrics (see a Notice profile).
16. Outlook: Its immersion cooling technology, which eliminates air conditioning and achieves ultra-low PUE/WUE metrics, positions it as a pre-IPO gem for accredited investors, per an EquityZen page.

Undervalued Opportunities

While Vertiv and Schneider Electric are well-established, their valuations reflect market confidence in their dominance. CoolIT Systems and LiquidStack, however, present higher-growth opportunities. CoolIT's $164.6 million revenue and KKR/Mubadala backing suggest it is underpriced relative to its AI-driven demand. LiquidStack, though private, offers a disruptive edge with its zero-water immersion cooling, appealing to ESG-focused investors.

Conclusion

The water crisis in AI infrastructure is a ticking time bomb, but it also illuminates a clear path for innovation and profit. As data centers race to adopt sustainable cooling, companies like Vertiv, Schneider Electric, CoolIT, and LiquidStack are not just mitigating risk-they're capitalizing on it. For investors, the key is to balance established leaders with high-growth disruptors, ensuring a portfolio that thrives in both the short and long term.