Amazon's Custom Liquid Cooling System for Data Centers Threatens Vertiv's Portfolio

Amazon Web Services (AWS) has developed a custom liquid cooling system for its data centers, which took 11 months to design, prototype, and manufacture. This move by AWS could impact shares of Vertiv, a company that offers liquid cooling solutions for data centers, which fell 1% to $126.74. The new system uses a direct-to-chip approach, placing a cold plate directly on top of the chip to absorb heat.

Amazon Web Services (AWS) has recently announced the development of a custom liquid cooling system designed to optimize the cooling of Nvidia's AI processors in its data centers. The system, which took 11 months to design, prototype, and manufacture, is a significant step in AWS's efforts to enhance the efficiency and performance of its cloud infrastructure.

The new cooling system, known as the In-Row Heat Exchanger (IRHX), is designed to cool Nvidia's GPUs used for artificial intelligence workloads. Traditional air cooling methods were insufficient for the high energy demands of these processors, prompting AWS to develop its own solution. Dave Brown, vice president of compute and machine learning services at AWS, explained that commercially available equipment would not meet the required liquid-cooling capacity for AWS's scale [1].

The IRHX system is designed to be plugged into existing and new data centers, addressing the space and water usage concerns associated with liquid-cooled data centers. This innovation allows AWS to offer computing instances such as P6e, which utilize Nvidia's design for dense computing power, including the GB200 NVL72, a single rack with 72 Nvidia Blackwell GPUs [1].

AWS's move into custom hardware development is not new. The company has previously designed its own chips for general-purpose computing and AI, as well as storage servers and networking routers. This strategy allows AWS to reduce its reliance on third-party suppliers, potentially benefiting its bottom line. In the first quarter of 2025, AWS delivered the widest operating margin since at least 2014, with the unit responsible for most of Amazon's net income [1].

The announcement of AWS's new cooling system has had an impact on the shares of Vertiv, a company that offers liquid cooling solutions for data centers. Vertiv's shares fell by 1% to $126.74 following the news. This decline reflects the potential market competition that AWS's custom cooling system poses to Vertiv's liquid cooling solutions [2].

Boyd, another player in the liquid cooling market, has also recently unveiled a high-capacity coolant distribution unit with a 2.3 megawatt capacity, designed for AI liquid cooling applications. Boyd's ROL2300 unit can efficiently cool over 10 NVL72 racks, offering high-capacity flow and pressure capabilities [2].

The need for efficient cooling in data centers is underscored by the increasing frequency of cooling-related outages. According to the Uptime Institute's Annual Outage Analysis 2025, cooling-related failures account for roughly one in eight impactful outages annually. Dedicated IT cooling systems, designed for continuous, high-density heat loads, are critical for maintaining optimal server performance and minimizing downtime [3].

In conclusion, AWS's custom liquid cooling system represents a significant advancement in data center cooling technology. While it may impact the market shares of companies like Vertiv, it also highlights the growing importance of efficient cooling in the data center industry. As AI workloads continue to grow, the need for innovative cooling solutions will only increase.

References:
[1] https://www.cnbc.com/2025/07/09/amazon-web-services-builds-heat-exchanger-to-cool-nvidia-gpus-for-ai.html
[2] https://www.morningstar.com/news/business-wire/20250708530818/boyd-unveils-a-high-capacity-coolant-distribution-unit-with-a-23-megawatt-capacity-for-ai-liquid-cooling-applications
[3] https://www.vertiv.com/en-asia/about/news-and-insights/articles/educational-articles/server-reliability-at-risk-how-comfort-cooling-compromises-uptime/